While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Virtus Investment Partners Inc (NASDAQ:VRTS).
Is VRTS a good stock to buy now? Virtus Investment Partners Inc (NASDAQ:VRTS) investors should be aware of an increase in hedge fund interest of late. Virtus Investment Partners Inc (NASDAQ:VRTS) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 18. Our calculations also showed that VRTS 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 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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
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. Now we’re going to take a peek at the new hedge fund action regarding Virtus Investment Partners Inc (NASDAQ:VRTS).
Do Hedge Funds Think VRTS Is A Good Stock To Buy Now?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in VRTS a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Point72 Asset Management held the most valuable stake in Virtus Investment Partners Inc (NASDAQ:VRTS), which was worth $19.1 million at the end of the third quarter. On the second spot was Newtyn Management which amassed $14.8 million worth of shares. Millennium Management, AWH Capital, and Balyasny Asset Management 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 AWH Capital allocated the biggest weight to Virtus Investment Partners Inc (NASDAQ:VRTS), around 11.41% of its 13F portfolio. Newtyn Management is also relatively very bullish on the stock, setting aside 3.58 percent of its 13F equity portfolio to VRTS.
Now, specific money managers have jumped into Virtus Investment Partners Inc (NASDAQ:VRTS) headfirst. Millennium Management, managed by Israel Englander, initiated the biggest position in Virtus Investment Partners Inc (NASDAQ:VRTS). Millennium Management had $9.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $6.2 million position during the quarter. The following funds were also among the new VRTS investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Minhua Zhang’s Weld Capital Management, and Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Virtus Investment Partners Inc (NASDAQ:VRTS) but similarly valued. These stocks are Evolent Health Inc (NYSE:EVH), Quanterix Corporation (NASDAQ:QTRX), Innoviva, Inc. (NASDAQ:INVA), Lakeland Financial Corporation (NASDAQ:LKFN), Materion Corp (NYSE:MTRN), EverQuote, Inc. (NASDAQ:EVER), and Avidity Biosciences, Inc. (NASDAQ:RNA). This group of stocks’ market caps resemble VRTS’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 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. That figure was $69 million in VRTS’s case. Innoviva, Inc. (NASDAQ:INVA) is the most popular stock in this table. On the other hand Lakeland Financial Corporation (NASDAQ:LKFN) is the least popular one with only 5 bullish hedge fund positions. Virtus Investment Partners Inc (NASDAQ:VRTS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VRTS is 60.5. 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. 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 still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on VRTS as the stock returned 55.4% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.