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Is Village Super Market, Inc. (VLGEA) A Good Stock To Buy?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Village Super Market, Inc. (NASDAQ:VLGEA).

Is Village Super Market, Inc. (NASDAQ:VLGEA) the right investment to pursue these days? Investors who are in the know are turning less bullish. The number of long hedge fund bets were cut by 3 recently. Our calculations also showed that VLGEA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). VLGEA was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. There were 10 hedge funds in our database with VLGEA positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chuck Royce

Chuck Royce of Royce & Associates

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the key hedge fund action surrounding Village Super Market, Inc. (NASDAQ:VLGEA).

How have hedgies been trading Village Super Market, Inc. (NASDAQ:VLGEA)?

At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards VLGEA over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Village Super Market, Inc. (NASDAQ:VLGEA), with a stake worth $16 million reported as of the end of September. Trailing Renaissance Technologies was GAMCO Investors, which amassed a stake valued at $2.9 million. Royce & Associates, Winton Capital Management, and Arrowstreet Capital 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 Zebra Capital Management allocated the biggest weight to Village Super Market, Inc. (NASDAQ:VLGEA), around 0.44% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to VLGEA.

Since Village Super Market, Inc. (NASDAQ:VLGEA) has faced declining sentiment from the smart money, it’s easy to see that there is a sect of money managers that elected to cut their positions entirely heading into Q4. At the top of the heap, Israel Englander’s Millennium Management sold off the largest stake of the 750 funds followed by Insider Monkey, totaling about $0.4 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund dropped about $0.3 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Village Super Market, Inc. (NASDAQ:VLGEA) but similarly valued. We will take a look at Adaptimmune Therapeutics plc (NASDAQ:ADAP), Tuscan Holdings Corp. (NASDAQ:THCB), Merus N.V. (NASDAQ:MRUS), and Triumph Group Inc (NYSE:TGI). All of these stocks’ market caps are closest to VLGEA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ADAP 11 163151 2
THCB 9 62865 -1
MRUS 11 132226 -2
TGI 18 38104 2
Average 12.25 99087 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $22 million in VLGEA’s case. Triumph Group Inc (NYSE:TGI) is the most popular stock in this table. On the other hand Tuscan Holdings Corp. (NASDAQ:THCB) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Village Super Market, Inc. (NASDAQ:VLGEA) is even less popular than THCB. Hedge funds dodged a bullet by taking a bearish stance towards VLGEA. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately VLGEA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); VLGEA investors were disappointed as the stock returned 8% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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