We can judge whether Vedanta Ltd (NYSE:VEDL) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Vedanta Ltd (NYSE:VEDL) has experienced an increase in hedge fund interest of late. VEDL was in 7 hedge funds’ portfolios at the end of December. There were 5 hedge funds in our database with VEDL holdings at the end of the previous quarter. Our calculations also showed that VEDL isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the new hedge fund action regarding Vedanta Ltd (NYSE:VEDL).
How have hedgies been trading Vedanta Ltd (NYSE:VEDL)?
Heading into the first quarter of 2019, a total of 7 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 VEDL over the last 14 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.
Among these funds, LMR Partners held the most valuable stake in Vedanta Ltd (NYSE:VEDL), which was worth $22.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $20.9 million worth of shares. Moreover, AQR Capital Management, Weld Capital Management, and Two Sigma Advisors were also bullish on Vedanta Ltd (NYSE:VEDL), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, assembled the most outsized position in Vedanta Ltd (NYSE:VEDL). LMR Partners had $22.4 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $1 million position during the quarter. The only other fund with a new position in the stock is D. E. Shaw’s D E Shaw.
Let’s also examine hedge fund activity in other stocks similar to Vedanta Ltd (NYSE:VEDL). We will take a look at Western Digital Corporation (NASDAQ:WDC), Icahn Enterprises LP (NASDAQ:IEP), DexCom, Inc. (NASDAQ:DXCM), and Marvell Technology Group Ltd. (NASDAQ:MRVL). This group of stocks’ market valuations resemble VEDL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WDC | 25 | 566493 | -8 |
| IEP | 6 | 10137794 | 2 |
| DXCM | 31 | 738361 | 1 |
| MRVL | 35 | 1328538 | 4 |
| Average | 24.25 | 3192797 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $3193 million. That figure was $56 million in VEDL’s case. Marvell Technology Group Ltd. (NASDAQ:MRVL) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 6 bullish hedge fund positions. Vedanta Ltd (NYSE:VEDL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately VEDL wasn’t in this group. Hedge funds that bet on VEDL were disappointed as the stock lost 11.8% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
