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Hedge Funds Keep Selling Vector Group Ltd (VGR)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Vector Group Ltd (NYSE:VGR) based on that data.

Is Vector Group Ltd (NYSE:VGR) undervalued? Prominent investors are selling. The number of bullish hedge fund positions fell by 1 recently. Our calculations also showed that VGR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). VGR was in 16 hedge funds’ portfolios at the end of the first quarter of 2020. There were 17 hedge funds in our database with VGR positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are plenty of signals stock traders put to use to evaluate stocks. Two of the most underrated signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite investment managers can outclass the S&P 500 by a solid amount (see the details here).

David Harding

David Harding of Winton Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the new hedge fund action surrounding Vector Group Ltd (NYSE:VGR).

How have hedgies been trading Vector Group Ltd (NYSE:VGR)?

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VGR over the last 18 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.

Is VGR A Good Stock To Buy?

The largest stake in Vector Group Ltd (NYSE:VGR) was held by Renaissance Technologies, which reported holding $96.3 million worth of stock at the end of September. It was followed by GLG Partners with a $8.4 million position. Other investors bullish on the company included Orbis Investment Management, Citadel Investment Group, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to Vector Group Ltd (NYSE:VGR), around 0.1% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.09 percent of its 13F equity portfolio to VGR.

Since Vector Group Ltd (NYSE:VGR) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds that elected to cut their entire stakes heading into Q4. Interestingly, Israel Englander’s Millennium Management cut the biggest stake of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $15.5 million in stock. Jonathan Lourie and Stuart Fiertz’s fund, Cheyne Capital, also said goodbye to its stock, about $2.6 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Vector Group Ltd (NYSE:VGR). We will take a look at Hostess Brands, Inc. (NASDAQ:TWNK), Zymeworks Inc. (NYSE:ZYME), Gibraltar Industries Inc (NASDAQ:ROCK), and Cimpress plc (NASDAQ:CMPR). This group of stocks’ market values match VGR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TWNK 30 165605 -7
ZYME 27 654899 3
ROCK 19 103608 -4
CMPR 19 269535 1
Average 23.75 298412 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $298 million. That figure was $123 million in VGR’s case. Hostess Brands, Inc. (NASDAQ:TWNK) is the most popular stock in this table. On the other hand Gibraltar Industries Inc (NASDAQ:ROCK) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Vector Group Ltd (NYSE:VGR) is even less popular than ROCK. Hedge funds dodged a bullet by taking a bearish stance towards VGR. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but managed to beat the market by 16.8 percentage points. Unfortunately VGR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); VGR investors were disappointed as the stock returned 12.4% during the second quarter (through June 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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