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Is Vericel Corp (VCEL) Going To Burn These Hedge Funds ?

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Vericel Corp (NASDAQ:VCEL).

Vericel Corp (NASDAQ:VCEL) was in 17 hedge funds’ portfolios at the end of June. VCEL has experienced a decrease in hedge fund interest in recent months. There were 25 hedge funds in our database with VCEL positions at the end of the previous quarter. Our calculations also showed that VCEL isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are a multitude of indicators stock traders employ to size up publicly traded companies. A duo of the most useful indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outperform the S&P 500 by a significant margin (see the details here).

VCEL_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the key hedge fund action encompassing Vericel Corp (NASDAQ:VCEL).

How have hedgies been trading Vericel Corp (NASDAQ:VCEL)?

At Q2’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -32% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VCEL over the last 16 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

James Flynn Deerfield Management

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Consonance Capital Management, managed by Mitchell Blutt, holds the most valuable position in Vericel Corp (NASDAQ:VCEL). Consonance Capital Management has a $55.4 million position in the stock, comprising 3.9% of its 13F portfolio. Sitting at the No. 2 spot is Deerfield Management, managed by James E. Flynn, which holds a $39.1 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions comprise Richard Driehaus’s Driehaus Capital, Ken Grossman and Glen Schneider’s SG Capital Management and Constantinos J. Christofilis’s Archon Capital Management.

Because Vericel Corp (NASDAQ:VCEL) has witnessed a decline in interest from the smart money, logic holds that there lies a certain “tier” of funds that elected to cut their entire stakes by the end of the second quarter. It’s worth mentioning that Renaissance Technologies dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $6.3 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $3.2 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 8 funds by the end of the second quarter.

Let’s go over hedge fund activity in other stocks similar to Vericel Corp (NASDAQ:VCEL). These stocks are ViewRay, Inc. (NASDAQ:VRAY), US Concrete Inc (NASDAQ:USCR), Berry Petroleum Corporation (NASDAQ:BRY), and Forestar Group Inc. (NYSE:FOR). This group of stocks’ market values resemble VCEL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VRAY 17 347601 -6
USCR 17 91942 0
BRY 18 192624 2
FOR 4 77243 -3
Average 14 177353 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $177 million in VCEL’s case. Berry Petroleum Corporation (NASDAQ:BRY) is the most popular stock in this table. On the other hand Forestar Group Inc. (NYSE:FOR) is the least popular one with only 4 bullish hedge fund positions. Vericel Corp (NASDAQ:VCEL) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately VCEL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VCEL were disappointed as the stock returned -19.9% during the third quarter 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 many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.

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