Is Verisign, Inc. (VRSN) A Good Stock To Buy?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Verisign, Inc. (NASDAQ:VRSN) in this article.

Is VRSN a good stock to buy? Verisign, Inc. (NASDAQ:VRSN) investors should be aware of a decrease in enthusiasm from smart money in recent months. Verisign, Inc. (NASDAQ:VRSN) was in 42 hedge funds’ portfolios at the end of March. The all time high for this statistic is 47. Our calculations also showed that VRSN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you’d ask most stock holders, hedge funds are seen as worthless, outdated investment vehicles of the past. While there are over 8000 funds with their doors open at present, We hone in on the leaders of this group, around 850 funds. These hedge fund managers orchestrate bulk of the smart money’s total asset base, and by monitoring their best investments, Insider Monkey has formulated several investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

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Do Hedge Funds Think VRSN Is A Good Stock To Buy Now?

At Q1’s end, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the fourth quarter of 2020. By comparison, 41 hedge funds held shares or bullish call options in VRSN a year ago. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the most valuable position in Verisign, Inc. (NASDAQ:VRSN), worth close to $2.5472 billion, accounting for 0.9% of its total 13F portfolio. On Berkshire Hathaway’s heels is Renaissance Technologies,  which holds a $967.6 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise D. E. Shaw’s D E Shaw, William von Mueffling’s Cantillon Capital Management and Sharlyn C. Heslam’s Stockbridge Partners. In terms of the portfolio weights assigned to each position Yost Capital Management allocated the biggest weight to Verisign, Inc. (NASDAQ:VRSN), around 20.32% of its 13F portfolio. Stockbridge Partners is also relatively very bullish on the stock, designating 7.9 percent of its 13F equity portfolio to VRSN.

Seeing as Verisign, Inc. (NASDAQ:VRSN) has witnessed bearish sentiment from the smart money, it’s safe to say that there is a sect of hedgies that elected to cut their positions entirely by the end of the first quarter. It’s worth mentioning that Zach Petrone’s Highside Global Management dropped the largest stake of all the hedgies watched by Insider Monkey, valued at close to $16.1 million in stock. Jack Ripsteen’s fund, Potrero Capital Research, also sold off its stock, about $13.8 million worth. These transactions are important to note, as total hedge fund interest was cut by 5 funds by the end of the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Verisign, Inc. (NASDAQ:VRSN). We will take a look at Zillow Group Inc (NASDAQ:Z), Alexandria Real Estate Equities Inc (NYSE:ARE), FleetCor Technologies, Inc. (NYSE:FLT), Vulcan Materials Company (NYSE:VMC), EPAM Systems Inc (NYSE:EPAM), EXACT Sciences Corporation (NASDAQ:EXAS), and Paycom Software Inc (NYSE:PAYC). This group of stocks’ market caps are closest to VRSN’s market cap.

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As you can see these stocks had an average of 43.9 hedge funds with bullish positions and the average amount invested in these stocks was $1820 million. That figure was $5639 million in VRSN’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand EPAM Systems Inc (NYSE:EPAM) is the least popular one with only 24 bullish hedge fund positions. Verisign, Inc. (NASDAQ:VRSN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VRSN is 42.3. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on VRSN as the stock returned 12.3% since the end of the first quarter (through 6/18) and outperformed the market by an even larger margin.

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

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