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Vince Holding Corp (VNCE): Are Hedge Funds Right About This Stock?

Last year’s fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 34.7% in 2019 (through November 22nd) and outperformed the S&P 500 ETF by 8.5 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Vince Holding Corp (NYSE:VNCE) changed during the first quarter.

Is Vince Holding Corp (NYSE:VNCE) a buy here? Investors who are in the know are in a bullish mood. The number of long hedge fund bets moved up by 1 in recent months. Our calculations also showed that VNCE isn’t among the 30 most popular stocks among hedge funds. VNCE was in 3 hedge funds’ portfolios at the end of the third quarter of 2019. There were 2 hedge funds in our database with VNCE holdings at the end of the previous quarter.

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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Harding

David Harding of Winton Capital Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the latest hedge fund action surrounding Vince Holding Corp (NYSE:VNCE).

Hedge fund activity in Vince Holding Corp (NYSE:VNCE)

At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 3 hedge funds with a bullish position in VNCE a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

VNCE_nov2019

More specifically, Renaissance Technologies was the largest shareholder of Vince Holding Corp (NYSE:VNCE), with a stake worth $3.1 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $2.7 million. Winton Capital Management was 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 0.02% of its portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.0029 percent of its 13F equity portfolio to VNCE.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Winton Capital Management, managed by David Harding, created the largest position in Vince Holding Corp (NYSE:VNCE). Winton Capital Management had $0.2 million invested in the company at the end of the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Vince Holding Corp (NYSE:VNCE) but similarly valued. These stocks are CRH Medical Corporation (NYSE:CRHM), Babcock & Wilcox Enterprises Inc (NYSE:BW), Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), and Brasilagro Cia Brasileira De Propriedades Agricolas (NYSE:LND). This group of stocks’ market caps are closest to VNCE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CRHM 6 39884 0
BW 8 35123 -4
AGLE 13 89709 -3
LND 1 47 0
Average 7 41191 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $6 million in VNCE’s case. Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) is the most popular stock in this table. On the other hand Brasilagro Cia Brasileira De Propriedades Agricolas (NYSE:LND) is the least popular one with only 1 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 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. A small number of hedge funds were also right about betting on VNCE as the stock returned 15.4% during Q4 (through 11/22) and outperformed the market by an even larger margin.

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

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