The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Veeva Systems Inc (NYSE:VEEV).
Is VEEV a good stock to buy now? Prominent investors were becoming more confident. The number of bullish hedge fund bets advanced by 3 in recent months. Veeva Systems Inc (NYSE:VEEV) was in 38 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 44. Our calculations also showed that VEEV 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. Keeping this in mind we’re going to take a glance at the latest hedge fund action regarding Veeva Systems Inc (NYSE:VEEV).
Do Hedge Funds Think VEEV Is A Good Stock To Buy Now?
At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. By comparison, 36 hedge funds held shares or bullish call options in VEEV a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Veeva Systems Inc (NYSE:VEEV), which was worth $204.5 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $86.2 million worth of shares. PEAK6 Capital Management, Zevenbergen Capital Investments, and Citadel Investment Group 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 Navellier & Associates allocated the biggest weight to Veeva Systems Inc (NYSE:VEEV), around 4.22% of its 13F portfolio. Harbor Spring Capital is also relatively very bullish on the stock, dishing out 3.27 percent of its 13F equity portfolio to VEEV.
Now, some big names have jumped into Veeva Systems Inc (NYSE:VEEV) headfirst. Harbor Spring Capital, managed by Amit Nitin Doshi, assembled the largest position in Veeva Systems Inc (NYSE:VEEV). Harbor Spring Capital had $30.4 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also made a $20.2 million investment in the stock during the quarter. The following funds were also among the new VEEV investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Michael Gelband’s ExodusPoint Capital, and Louis Bacon’s Moore Global Investments.
Let’s now take a look at hedge fund activity in other stocks similar to Veeva Systems Inc (NYSE:VEEV). We will take a look at General Motors Company (NYSE:GM), Monster Beverage Corp (NASDAQ:MNST), HCA Healthcare Inc (NYSE:HCA), Roper Technologies Inc. (NYSE:ROP), Canadian Pacific Railway Limited (NYSE:CP), Honda Motor Co Ltd (NYSE:HMC), and Digital Realty Trust, Inc. (NYSE:DLR). This group of stocks’ market valuations match VEEV’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 42.7 hedge funds with bullish positions and the average amount invested in these stocks was $1858 million. That figure was $734 million in VEEV’s case. HCA Healthcare Inc (NYSE:HCA) is the most popular stock in this table. On the other hand Honda Motor Co Ltd (NYSE:HMC) is the least popular one with only 11 bullish hedge fund positions. Veeva Systems Inc (NYSE:VEEV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VEEV is 56.4. 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. 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 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 33.3% in 2020 through December 18th and surpassed the market again by 16.4 percentage points. Unfortunately VEEV wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); VEEV investors were disappointed as the stock returned -1.9% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.