Where Do Hedge Funds Stand On Varex Imaging Corporation (VREX)?

Is Varex Imaging Corporation (NASDAQ:VREX) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Varex Imaging Corporation (NASDAQ:VREX) investors should be aware of an increase in support from the world’s most elite money managers of late. Varex Imaging Corporation (NASDAQ:VREX) was in 22 hedge funds’ portfolios at the end of March. The all time high for this statistic is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 19 hedge funds in our database with VREX holdings at the end of December. Our calculations also showed that VREX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Today there are a large number of gauges stock traders put to use to appraise stocks. A pair of the best gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass their index-focused peers by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Richard Pzena - Pzena Investment Management

Richard S. Pzena of Pzena Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s view the recent hedge fund action encompassing Varex Imaging Corporation (NASDAQ:VREX).

Do Hedge Funds Think VREX Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in VREX a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is VREX A Good Stock To Buy?

More specifically, Pzena Investment Management was the largest shareholder of Varex Imaging Corporation (NASDAQ:VREX), with a stake worth $34 million reported as of the end of March. Trailing Pzena Investment Management was Sessa Capital, which amassed a stake valued at $24.9 million. Royce & Associates, Millennium Management, and Point72 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 Rutabaga Capital Management allocated the biggest weight to Varex Imaging Corporation (NASDAQ:VREX), around 1.57% of its 13F portfolio. Sessa Capital is also relatively very bullish on the stock, designating 0.96 percent of its 13F equity portfolio to VREX.

As industrywide interest jumped, key hedge funds have jumped into Varex Imaging Corporation (NASDAQ:VREX) headfirst. Citadel Investment Group, managed by Ken Griffin, assembled the biggest position in Varex Imaging Corporation (NASDAQ:VREX). Citadel Investment Group had $2.4 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.9 million position during the quarter. The other funds with brand new VREX positions are Noam Gottesman’s GLG Partners, Jonathan Soros’s JS Capital, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to Varex Imaging Corporation (NASDAQ:VREX). We will take a look at Blucora Inc (NASDAQ:BCOR), ACCO Brands Corporation (NYSE:ACCO), Casa Systems, Inc. (NASDAQ:CASA), NexTier Oilfield Solutions Inc. (NYSE:NEX), Kelly Services, Inc. (NASDAQ:KELYA), Dynegy Inc. (NYSE:DYN), and Gravity Co., LTD. (NASDAQ:GRVY). This group of stocks’ market caps are closest to VREX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BCOR 14 150015 -2
ACCO 15 46233 -2
CASA 13 16814 4
NEX 23 243906 1
KELYA 8 12834 2
DYN 21 237563 -1
GRVY 7 20043 3
Average 14.4 103915 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $115 million in VREX’s case. NexTier Oilfield Solutions Inc. (NYSE:NEX) is the most popular stock in this table. On the other hand Gravity Co., LTD. (NASDAQ:GRVY) is the least popular one with only 7 bullish hedge fund positions. Varex Imaging Corporation (NASDAQ:VREX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VREX is 84.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on VREX as the stock returned 26.6% since the end of Q1 (through 7/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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