Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of VEON Ltd. (NASDAQ:VEON).
Is VEON Ltd. (NASDAQ:VEON) an excellent stock to buy now? The smart money was buying. The number of long hedge fund bets rose by 2 in recent months. VEON Ltd. (NASDAQ:VEON) was in 8 hedge funds’ portfolios at the end of September. The all time high for this statistics is 21. Our calculations also showed that VEON isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s analyze the latest hedge fund action regarding VEON Ltd. (NASDAQ:VEON).
What does smart money think about VEON Ltd. (NASDAQ:VEON)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in VEON over the last 21 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in VEON Ltd. (NASDAQ:VEON), which was worth $8 million at the end of the third quarter. On the second spot was Oaktree Capital Management which amassed $2.4 million worth of shares. Two Sigma Advisors, Maverick Capital, and GAMCO Investors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Oaktree Capital Management allocated the biggest weight to VEON Ltd. (NASDAQ:VEON), around 0.05% of its 13F portfolio. Maverick Capital is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to VEON.
Consequently, some big names have jumped into VEON Ltd. (NASDAQ:VEON) headfirst. Maverick Capital, managed by Lee Ainslie, created the most outsized position in VEON Ltd. (NASDAQ:VEON). Maverick Capital had $1.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.8 million position during the quarter. The other funds with brand new VEON positions are Michael Gelband’s ExodusPoint Capital and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as VEON Ltd. (NASDAQ:VEON) but similarly valued. We will take a look at F.N.B. Corp (NYSE:FNB), Central Garden & Pet Co (NASDAQ:CENT), 2U Inc (NASDAQ:TWOU), Worthington Industries, Inc. (NYSE:WOR), Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX), Weingarten Realty Investors (NYSE:WRI), and Kirby Corporation (NYSE:KEX). This group of stocks’ market valuations resemble VEON’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $16 million in VEON’s case. Kirby Corporation (NYSE:KEX) is the most popular stock in this table. On the other hand Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks VEON Ltd. (NASDAQ:VEON) is even less popular than FMTX. Our overall hedge fund sentiment score for VEON is 18.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds clearly dropped the ball on VEON as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on VEON as the stock returned 17.5% since Q3 (through December 2nd) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.