Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Valeant and SunEdison, have not done well during the last 12 months due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 mid-cap stocks (market caps between $1 billion and $10 billion) among hedge funds delivered an average return of 18% during the last four quarters. S&P 500 Index returned only 7.6% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds and billionaire investors think before doing extensive research on a stock. In this article, we take a closer look at VCA Inc (NASDAQ:WOOF) from the perspective of those elite funds.
VCA Inc (NASDAQ:WOOF) was in 34 hedge funds’ portfolios at the end of the third quarter of 2016. WOOF investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 30 hedge funds in our database with WOOF positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as MarketAxess Holdings Inc. (NASDAQ:MKTX), Herbalife Ltd. (NYSE:HLF), and Empresa Nacional de Electricidad S.A. (NYSE:EOCC) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, we’re going to go over the recent action encompassing VCA Inc (NASDAQ:WOOF).
What does the smart money think about VCA Inc (NASDAQ:WOOF)?
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the largest position in VCA Inc (NASDAQ:WOOF), worth close to $98 million, corresponding to 0.2% of its total 13F portfolio. The second most bullish fund manager is D E Shaw, managed by D. E. Shaw, which holds a $66.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Jim Simons’ Renaissance Technologies, Principal Global Investors’ Columbus Circle Investors and James Dondero’s Highland Capital Management.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Coe Capital Management, managed by Mark Coe, established the largest position in VCA Inc (NASDAQ:WOOF). Coe Capital Management had $4.3 million invested in the company at the end of the quarter. George Hall’s Clinton Group also made a $3.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Mike Vranos’ Ellington, and David Costen Haley’s HBK Investments.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as VCA Inc (NASDAQ:WOOF) but similarly valued. We will take a look at MarketAxess Holdings Inc. (NASDAQ:MKTX), Herbalife Ltd. (NYSE:HLF), Empresa Nacional de Electricidad S.A. (NYSE:EOCC), and CBOE Holdings, Inc (NASDAQ:CBOE). This group of stocks’ market valuations resemble WOOF’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $960 million. That figure was $479 million in WOOF’s case. Herbalife Ltd. (NYSE:HLF) is the most popular stock in this table. On the other hand Empresa Nacional de Electricidad S.A. (NYSE:EOCC) is the least popular one with only 11 bullish hedge fund positions. VCA Inc (NASDAQ:WOOF) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HLF might be a better candidate to consider a long position.