It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like VASCO Data Security International, Inc. (NASDAQ:VDSI).
Is VASCO Data Security International, Inc. (NASDAQ:VDSI) a good stock to buy? Money managers are definitely in an optimistic mood. The number of long hedge fund bets that are revealed through 13F filings grew by 2 lately. VDSI was in 16 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with VDSI positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Nautilus, Inc. (NYSE:NLS), Pinnacle Entertainment, Inc (NYSE:PNK), and Solaredge Technologies Inc (NASDAQ:SEDG) to gather more data points.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Hedge fund activity in VASCO Data Security International, Inc. (NASDAQ:VDSI)
Heading into the fourth quarter of 2016, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a gain of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VDSI over the last 5 quarters, which shows a fair degree of volatility. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Gregg J. Powers’ Private Capital Management has the most valuable position in VASCO Data Security International, Inc. (NASDAQ:VDSI), worth close to $17.5 million, corresponding to 2.6% of its total 13F portfolio. The second most bullish fund manager is Brian Ashford-Russell and Tim Woolley of Polar Capital, with a $13.6 million position. Remaining peers with similar optimism encompass D E Shaw, one of the biggest hedge funds in the world, Jim Simons’ Renaissance Technologies, and Joel Greenblatt’s Gotham Asset Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.