We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Victory Capital Holdings, Inc. (NASDAQ:VCTR) based on that data.
Is Victory Capital Holdings (VCTR) a good stock to buy now? VCTR was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 13. VCTR shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 9 hedge funds in our database with VCTR holdings at the end of June. Our calculations also showed that VCTR 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.
In the 21st century investor’s toolkit there are a large number of formulas stock market investors put to use to assess stocks. A duo of the best formulas are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the best hedge fund managers can beat their index-focused peers by a superb margin (see the details here).
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. With all of this in mind let’s take a look at the key hedge fund action encompassing Victory Capital Holdings, Inc. (NASDAQ:VCTR).
How have hedgies been trading Victory Capital Holdings, Inc. (NASDAQ:VCTR)?
At third quarter’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in VCTR over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Steamboat Capital Partners was the largest shareholder of Victory Capital Holdings, Inc. (NASDAQ:VCTR), with a stake worth $30.1 million reported as of the end of September. Trailing Steamboat Capital Partners was Impax Asset Management, which amassed a stake valued at $18 million. Millennium Management, Arrowstreet Capital, and Renaissance Technologies 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 Steamboat Capital Partners allocated the biggest weight to Victory Capital Holdings, Inc. (NASDAQ:VCTR), around 4.9% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, dishing out 0.16 percent of its 13F equity portfolio to VCTR.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Islet Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified VCTR as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Victory Capital Holdings, Inc. (NASDAQ:VCTR) but similarly valued. We will take a look at Revolve Group, Inc. (NYSE:RVLV), First Bancorp (NYSE:FBP), CSW Industrials, Inc. (NASDAQ:CSWI), Urban Edge Properties (NYSE:UE), Banner Corporation (NASDAQ:BANR), The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), and Repare Therapeutics Inc. (NASDAQ:RPTX). This group of stocks’ market values are closest to VCTR’s market value.
|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 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $60 million in VCTR’s case. Revolve Group, Inc. (NYSE:RVLV) is the most popular stock in this table. On the other hand Banner Corporation (NASDAQ:BANR) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Victory Capital Holdings, Inc. (NASDAQ:VCTR) is even less popular than BANR. Our overall hedge fund sentiment score for VCTR is 22.5. 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. Hedge funds clearly dropped the ball on VCTR as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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. A small number of hedge funds were also right about betting on VCTR as the stock returned 29.1% since Q3 (through December 2nd) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.