At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Velodyne Lidar, Inc. (NASDAQ:VLDR) makes for a good investment right now.
Is VLDR a good stock to buy now? Velodyne Lidar, Inc. (NASDAQ:VLDR) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 16. VLDR investors should pay attention to a decrease in hedge fund interest in recent months. There were 16 hedge funds in our database with VLDR positions at the end of the second quarter. Our calculations also showed that VLDR 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.
To most market participants, hedge funds are assumed to be unimportant, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at the moment, Our experts hone in on the elite of this club, about 850 funds. Most estimates calculate that this group of people preside over bulk of the smart money’s total capital, and by watching their first-class investments, Insider Monkey has identified several investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 we’re going to review the key hedge fund action surrounding Velodyne Lidar, Inc. (NASDAQ:VLDR).
Do Hedge Funds Think VLDR Is A Good Stock To Buy Now?
At third quarter’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in VLDR a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Hudson Bay Capital Management held the most valuable stake in Velodyne Lidar, Inc. (NASDAQ:VLDR), which was worth $56.1 million at the end of the third quarter. On the second spot was Millennium Management which amassed $20.4 million worth of shares. Magnetar Capital, Magnetar Capital, and Water Island 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 Hudson Bay Capital Management allocated the biggest weight to Velodyne Lidar, Inc. (NASDAQ:VLDR), around 0.83% of its 13F portfolio. Water Island Capital is also relatively very bullish on the stock, dishing out 0.61 percent of its 13F equity portfolio to VLDR.
Because Velodyne Lidar, Inc. (NASDAQ:VLDR) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Steven Clark’s Omni Partners sold off the biggest stake of all the hedgies watched by Insider Monkey, worth about $11.4 million in stock. David Alexander Witkin’s fund, Beryl Capital Management, also cut its stock, about $7.8 million worth. These transactions are interesting, as total hedge fund interest was cut by 3 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Velodyne Lidar, Inc. (NASDAQ:VLDR) but similarly valued. These stocks are Twist Bioscience Corporation (NASDAQ:TWST), Stantec Inc. (NYSE:STN), Iridium Communications Inc. (NASDAQ:IRDM), TG Therapeutics Inc (NASDAQ:TGTX), Global Blood Therapeutics Inc (NASDAQ:GBT), Parsons Corporation (NYSE:PSN), and Vertex, Inc. (NASDAQ:VERX). This group of stocks’ market values are similar to VLDR’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 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $313 million. That figure was $121 million in VLDR’s case. TG Therapeutics Inc (NASDAQ:TGTX) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 8 bullish hedge fund positions. Velodyne Lidar, Inc. (NASDAQ:VLDR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VLDR is 37.7. 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 32.9% in 2020 through December 8th and beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on VLDR, though not to the same extent, as the stock returned 11.5% since the end of Q3 (through December 8th) and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.