Is Verisign (VRSN) Stock A Buy or Sell?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Verisign, Inc. (NASDAQ:VRSN).

Is VRSN stock a buy or sell? Verisign, Inc. (NASDAQ:VRSN) has experienced an increase in support from the world’s most elite money managers in recent months. Verisign, Inc. (NASDAQ:VRSN) was in 47 hedge funds’ portfolios at the end of December. The all time high for this statistic is 47. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 46 hedge funds in our database with VRSN positions at the end of the third quarter. Our calculations also showed that VRSN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

William Von Mueffling - Cantillon Capital Management

William Von Mueffling of Cantillon Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage (or at the end of this article). Now let’s go over the new hedge fund action encompassing Verisign, Inc. (NASDAQ:VRSN).

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

At Q4’s end, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VRSN over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Berkshire Hathaway held the most valuable stake in Verisign, Inc. (NASDAQ:VRSN), which was worth $2773.3 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $1238.1 million worth of shares. D E Shaw, Stockbridge Partners, and Cantillon Capital Management 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 Yost Capital Management allocated the biggest weight to Verisign, Inc. (NASDAQ:VRSN), around 15.5% of its 13F portfolio. Atalan Capital is also relatively very bullish on the stock, earmarking 11.81 percent of its 13F equity portfolio to VRSN.

As industrywide interest jumped, some big names were leading the bulls’ herd. Two Creeks Capital Management, managed by Ryan Pedlow, assembled the largest position in Verisign, Inc. (NASDAQ:VRSN). Two Creeks Capital Management had $59.6 million invested in the company at the end of the quarter. Charles Pollnow’s Triple Frond Partners also made a $25.2 million investment in the stock during the quarter. The following funds were also among the new VRSN investors: Rob Cope’s Columbus Point, Brandon Haley’s Holocene Advisors, and Thomas Rigo’s Bishop Rock Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Verisign, Inc. (NASDAQ:VRSN) but similarly valued. We will take a look at Keysight Technologies Inc (NYSE:KEYS), ArcelorMittal (NYSE:MT), Coupa Software Incorporated (NASDAQ:COUP), Yandex NV (NASDAQ:YNDX), Slack Technologies Inc (NYSE:WORK), Fresenius Medical Care AG & Co. KGaA (NYSE:FMS), and The Williams Companies, Inc. (NYSE:WMB). This group of stocks’ market caps resemble VRSN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KEYS 27 592599 -9
MT 18 511254 -2
COUP 62 4125119 12
YNDX 34 1623779 1
WORK 66 3977861 46
FMS 9 15599 0
WMB 38 563371 0
Average 36.3 1629940 6.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1630 million. That figure was $6422 million in VRSN’s case. Slack Technologies Inc (NYSE:WORK) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) is the least popular one with only 9 bullish hedge fund positions. Verisign, Inc. (NASDAQ:VRSN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRSN is 69.3. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately VRSN wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on VRSN were disappointed as the stock returned -11.3% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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