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Is Vince Holding Corp (VNCE) 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 Vince Holding Corp (NYSE:VNCE).

Is Vince Holding Corp (NYSE:VNCE) ready to rally soon? Money managers are getting less bullish. The number of long hedge fund bets fell by 2 lately. Our calculations also showed that VNCE 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). VNCE was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. There were 7 hedge funds in our database with VNCE holdings 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 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 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. With all of this in mind let’s go over the fresh hedge fund action surrounding Vince Holding Corp (NYSE:VNCE).

How have hedgies been trading Vince Holding Corp (NYSE:VNCE)?

At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the fourth quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in VNCE a year ago. 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, Renaissance Technologies was the largest shareholder of Vince Holding Corp (NYSE:VNCE), with a stake worth $1.2 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $0.3 million. Millennium Management, Royce & Associates, and Marshall Wace LLP 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 Royce & Associates allocated the biggest weight to Vince Holding Corp (NYSE:VNCE), around 0.0012% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0012 percent of its 13F equity portfolio to VNCE.

Because Vince Holding Corp (NYSE:VNCE) has experienced falling interest from the aggregate hedge fund industry, logic holds that there exists a select few funds who were dropping their entire stakes heading into Q4. It’s worth mentioning that Michael Gelband’s ExodusPoint Capital dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $0.3 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also dumped its stock, about $0 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 2 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to Vince Holding Corp (NYSE:VNCE). These stocks are Blink Charging Co. (NASDAQ:BLNK), Acorda Therapeutics Inc (NASDAQ:ACOR), AmeriServ Financial, Inc. (NASDAQ:ASRV), and Travelzoo (NASDAQ:TZOO). All of these stocks’ market caps resemble VNCE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BLNK 3 334 0
ACOR 10 8065 -4
ASRV 3 4218 -1
TZOO 11 5687 3
Average 6.75 4576 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $2 million in VNCE’s case. Travelzoo (NASDAQ:TZOO) is the most popular stock in this table. On the other hand Blink Charging Co. (NASDAQ:BLNK) is the least popular one with only 3 bullish hedge fund positions. Vince Holding Corp (NYSE:VNCE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on VNCE as the stock returned 60.8% during the second quarter and outperformed the market by an even larger margin.

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