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Were Hedge Funds Wrong About Counting On Varex Imaging Corporation (VREX)?

Is Varex Imaging Corporation (NASDAQ:VREX) the right pick for your portfolio? The smart money is becoming more confident. The number of bullish hedge fund bets rose by 5 in recent months. Our calculations also showed that VREX isn’t among the 30 most popular stocks among hedge funds. VREX was in 20 hedge funds’ portfolios at the end of the first quarter of 2019. There were 15 hedge funds in our database with VREX positions at the end of the previous quarter.

At the moment there are numerous tools shareholders have at their disposal to evaluate stocks. A couple of the less known tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass the S&P 500 by a very impressive amount (see the details here).

Richard Pzena - Pzena Investment Management

We’re going to check out the key hedge fund action surrounding Varex Imaging Corporation (NASDAQ:VREX).

Hedge fund activity in Varex Imaging Corporation (NASDAQ:VREX)

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VREX over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

VREX_jun2019

The largest stake in Varex Imaging Corporation (NASDAQ:VREX) was held by Pzena Investment Management, which reported holding $35.9 million worth of stock at the end of March. It was followed by SG Capital Management with a $21.2 million position. Other investors bullish on the company included D E Shaw, Rutabaga Capital Management, and Royce & Associates.

As industrywide interest jumped, some big names have been driving this bullishness. SG Capital Management, managed by Ken Grossman and Glen Schneider, initiated the largest position in Varex Imaging Corporation (NASDAQ:VREX). SG Capital Management had $21.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $3.4 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Andre F. Perold’s HighVista Strategies, and Israel Englander’s Millennium Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Varex Imaging Corporation (NASDAQ:VREX) but similarly valued. We will take a look at Alector, Inc. (NASDAQ:ALEC), Stratasys, Ltd. (NASDAQ:SSYS), OneSmart International Education Group Limited (NYSE:ONE), and Bright Scholar Education Holdings Limited (NYSE:BEDU). All of these stocks’ market caps are similar to VREX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALEC 12 358037 12
SSYS 14 137475 0
ONE 6 42937 -1
BEDU 9 85774 1
Average 10.25 156056 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $111 million in VREX’s case. Stratasys, Ltd. (NASDAQ:SSYS) is the most popular stock in this table. On the other hand OneSmart International Education Group Limited (NYSE:ONE) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Varex Imaging Corporation (NASDAQ:VREX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 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 -13.6% during the same period 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 13 of these stocks already outperformed the market in Q2.

Disclosure: None. This article was originally published at Insider Monkey.

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