The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Veru Inc. (NASDAQ:VERU) based on those filings.
Is Veru Inc. (VERU) a good stock to buy now? Hedge funds were taking a bearish view. The number of bullish hedge fund bets retreated by 3 in recent months. Veru Inc. (NASDAQ:VERU) was in 7 hedge funds’ portfolios at the end of September. The all time high for this statistics is 10. Our calculations also showed that VERU 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). There were 10 hedge funds in our database with VERU holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 let’s take a glance at the recent hedge fund action surrounding Veru Inc. (NASDAQ:VERU).
What does smart money think about Veru Inc. (NASDAQ:VERU)?
Heading into the fourth quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -30% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in VERU a year ago. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Perceptive Advisors was the largest shareholder of Veru Inc. (NASDAQ:VERU), with a stake worth $4.3 million reported as of the end of September. Trailing Perceptive Advisors was Millennium Management, which amassed a stake valued at $1.9 million. Renaissance Technologies, Arrowstreet Capital, and Two Sigma Advisors 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 Perceptive Advisors allocated the biggest weight to Veru Inc. (NASDAQ:VERU), around 0.06% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, designating 0.0023 percent of its 13F equity portfolio to VERU.
Due to the fact that Veru Inc. (NASDAQ:VERU) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds that slashed their positions entirely by the end of the third quarter. It’s worth mentioning that Bruce Kovner’s Caxton Associates LP dumped the biggest investment of all the hedgies followed by Insider Monkey, valued at an estimated $0.3 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund dropped about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 3 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Veru Inc. (NASDAQ:VERU). These stocks are Chicken Soup for the Soul Entertainment, Inc. (NASDAQ:CSSE), LiveXLive Media, Inc. (NASDAQ:LIVX), Integra Resources Corp. (NYSE:ITRG), Calyxt, Inc. (NASDAQ:CLXT), Marrone Bio Innovations Inc (NASDAQ:MBII), American Outdoor Brands, Inc. (NASDAQ:AOUT), and Danaos Corporation (NYSE:DAC). This group of stocks’ market caps match VERU’s market cap.
|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 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $9 million in VERU’s case. American Outdoor Brands, Inc. (NASDAQ:AOUT) is the most popular stock in this table. On the other hand Integra Resources Corp. (NYSE:ITRG) is the least popular one with only 1 bullish hedge fund positions. Veru Inc. (NASDAQ:VERU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VERU is 56.3. 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 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on VERU as the stock returned 17.6% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.