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Should You Buy Virtus Investment Partners Inc (VRTS)?

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Virtus Investment Partners Inc (NASDAQ:VRTS) based on that data.

Virtus Investment Partners Inc (NASDAQ:VRTS) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. VRTS was in 13 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with VRTS positions at the end of the previous quarter. Our calculations also showed that VRTS isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Joe Huber - Huber Capital Management

We’re going to analyze the new hedge fund action encompassing Virtus Investment Partners Inc (NASDAQ:VRTS).

What does the smart money think about Virtus Investment Partners Inc (NASDAQ:VRTS)?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VRTS over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

VRTS_dec2018

More specifically, Huber Capital Management was the largest shareholder of Virtus Investment Partners Inc (NASDAQ:VRTS), with a stake worth $30.1 million reported as of the end of September. Trailing Huber Capital Management was Mangrove Partners, which amassed a stake valued at $17.2 million. Citadel Investment Group, Marcato Capital Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, some big names have jumped into Virtus Investment Partners Inc (NASDAQ:VRTS) headfirst. Ionic Capital Management, managed by Bart Baum, created the largest position in Virtus Investment Partners Inc (NASDAQ:VRTS). Ionic Capital Management had $3.5 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also initiated a $0.5 million position during the quarter. The following funds were also among the new VRTS investors: Paul Marshall and Ian Wace’s Marshall Wace LLP and Jeffrey Talpins’s Element Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Virtus Investment Partners Inc (NASDAQ:VRTS) but similarly valued. We will take a look at Monarch Casino & Resort, Inc. (NASDAQ:MCRI), Express, Inc. (NYSE:EXPR), FutureFuel Corp. (NYSE:FF), and German American Bancorp, Inc. (NASDAQ:GABC). 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
MCRI 10 140921 -1
EXPR 24 129129 6
FF 11 72328 1
GABC 5 9561 0
Average 12.5 87985 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $88 million in VRTS’s case. Express, Inc. (NYSE:EXPR) is the most popular stock in this table. On the other hand German American Bancorp, Inc. (NASDAQ:GABC) is the least popular one with only 5 bullish hedge fund positions. Virtus Investment Partners Inc (NASDAQ:VRTS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EXPR might be a better candidate to consider a long position.

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

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