In this article we will take a look at whether hedge funds think Vivint Smart Home, Inc. (NYSE:VVNT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Vivint Smart Home, Inc. (NYSE:VVNT) investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. VVNT was in 9 hedge funds’ portfolios at the end of March. There were 15 hedge funds in our database with VVNT positions at the end of the previous quarter. Our calculations also showed that VVNT 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are many indicators stock market investors have at their disposal to assess their holdings. Two of the most innovative indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the market by a superb margin (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. Keeping this in mind let’s go over the key hedge fund action surrounding Vivint Smart Home, Inc. (NYSE:VVNT).
Hedge fund activity in Vivint Smart Home, Inc. (NYSE:VVNT)
At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -40% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VVNT over the last 18 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Vivint Smart Home, Inc. (NYSE:VVNT) was held by Millennium Management, which reported holding $3.1 million worth of stock at the end of September. It was followed by Paloma Partners with a $1.2 million position. Other investors bullish on the company included Greenhaven Road Investment Management, Indaba Capital Management, and LMR Partners. In terms of the portfolio weights assigned to each position Greenhaven Road Investment Management allocated the biggest weight to Vivint Smart Home, Inc. (NYSE:VVNT), around 0.87% of its 13F portfolio. Indaba Capital Management is also relatively very bullish on the stock, designating 0.31 percent of its 13F equity portfolio to VVNT.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: 999. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Millennium Management).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Vivint Smart Home, Inc. (NYSE:VVNT) but similarly valued. These stocks are ViaSat, Inc. (NASDAQ:VSAT), Old National Bancorp (NYSE:ONB), HMS Holdings Corp. (NASDAQ:HMSY), and LiveRamp Holdings, Inc. (NYSE:RAMP). This group of stocks’ market valuations match VVNT’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 18 hedge funds with bullish positions and the average amount invested in these stocks was $296 million. That figure was $7 million in VVNT’s case. ViaSat, Inc. (NASDAQ:VSAT) is the most popular stock in this table. On the other hand Old National Bancorp (NYSE:ONB) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Vivint Smart Home, Inc. (NYSE:VVNT) is even less popular than ONB. Hedge funds clearly dropped the ball on VVNT as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on VVNT as the stock returned 43.4% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.