The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of Varex Imaging Corporation (NASDAQ:VREX).
Hedge fund interest in Varex Imaging Corporation (NASDAQ:VREX) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare VREX to other stocks including Wesco Aircraft Holdings Inc (NYSE:WAIR), Geopark Ltd (NYSE:GPRK), and Apollo Investment Corp. (NASDAQ:AINV) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a lot of formulas market participants use to grade stocks. Some of the most useful formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top fund managers can beat the S&P 500 by a significant amount (see the details here).
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the key hedge fund action encompassing Varex Imaging Corporation (NASDAQ:VREX).
How have hedgies been trading Varex Imaging Corporation (NASDAQ:VREX)?
Heading into the fourth quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in VREX a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Richard S. Pzena’s Pzena Investment Management has the biggest position in Varex Imaging Corporation (NASDAQ:VREX), worth close to $41 million, comprising 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which holds a $10.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism encompass David E. Shaw’s D E Shaw, Peter Schliemann’s Rutabaga Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Varex Imaging Corporation (NASDAQ:VREX), around 2.82% of its 13F portfolio. Ratan Capital Group is also relatively very bullish on the stock, earmarking 1.06 percent of its 13F equity portfolio to VREX.
Because Varex Imaging Corporation (NASDAQ:VREX) has experienced declining sentiment from the smart money, it’s easy to see that there is a sect of funds that slashed their full holdings heading into Q4. Intriguingly, Ken Grossman and Glen Schneider’s SG Capital Management said goodbye to the largest investment of all the hedgies watched by Insider Monkey, totaling close to $4 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund said goodbye to about $0.8 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Varex Imaging Corporation (NASDAQ:VREX) but similarly valued. These stocks are Wesco Aircraft Holdings Inc (NYSE:WAIR), Geopark Ltd (NYSE:GPRK), Apollo Investment Corp. (NASDAQ:AINV), and RPT Realty (NYSE:RPT). This group of stocks’ market valuations are closest to VREX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WAIR | 23 | 226099 | 2 |
| GPRK | 8 | 96471 | -2 |
| AINV | 10 | 28823 | 4 |
| RPT | 11 | 37172 | 2 |
| Average | 13 | 97141 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $93 million in VREX’s case. Wesco Aircraft Holdings Inc (NYSE:WAIR) is the most popular stock in this table. On the other hand Geopark Ltd (NYSE:GPRK) is the least popular one with only 8 bullish hedge fund positions. Varex Imaging Corporation (NASDAQ:VREX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately VREX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VREX were disappointed as the stock returned 4.9% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
