How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Veeva Systems Inc (NYSE:VEEV).
Is Veeva Systems Inc (NYSE:VEEV) the right investment to pursue these days? The smart money was becoming more confident. The number of bullish hedge fund bets went up by 3 in recent months. Veeva Systems Inc (NYSE:VEEV) was in 39 hedge funds’ portfolios at the end of March. The all time high for this statistic is 44. Our calculations also showed that VEEV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 36 hedge funds in our database with VEEV holdings at the end of December.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. Keeping this in mind we’re going to take a gander at the latest hedge fund action regarding Veeva Systems Inc (NYSE:VEEV).
Do Hedge Funds Think VEEV Is A Good Stock To Buy Now?
At the end of March, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the fourth quarter of 2020. On the other hand, there were a total of 33 hedge funds with a bullish position in VEEV a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Veeva Systems Inc (NYSE:VEEV) was held by ARK Investment Management, which reported holding $219.1 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $202.8 million position. Other investors bullish on the company included Echo Street Capital Management, Zevenbergen Capital Investments, and Citadel Investment Group. In terms of the portfolio weights assigned to each position 1623 Capital allocated the biggest weight to Veeva Systems Inc (NYSE:VEEV), around 3.68% of its 13F portfolio. Harbor Spring Capital is also relatively very bullish on the stock, dishing out 3.52 percent of its 13F equity portfolio to VEEV.
With a general bullishness amongst the heavyweights, key money managers have jumped into Veeva Systems Inc (NYSE:VEEV) headfirst. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, created the most valuable position in Veeva Systems Inc (NYSE:VEEV). Healthcor Management LP had $22.4 million invested in the company at the end of the quarter. Stephen Yiu’s Blue Whale Capital also made a $14.4 million investment in the stock during the quarter. The other funds with brand new VEEV positions are Matthew Hulsizer’s PEAK6 Capital Management, Henrik Rhenman’s Rhenman & Partners Asset Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Veeva Systems Inc (NYSE:VEEV). We will take a look at Amphenol Corporation (NYSE:APH), Trane Technologies plc (NYSE:TT), T. Rowe Price Group, Inc. (NASDAQ:TROW), Electronic Arts Inc. (NASDAQ:EA), Constellation Brands, Inc. (NYSE:STZ), Agilent Technologies Inc. (NYSE:A), and Ferrari N.V. (NYSE:RACE). This group of stocks’ market values are closest to VEEV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APH | 42 | 1077461 | 1 |
| TT | 35 | 1092597 | 1 |
| TROW | 26 | 303927 | -9 |
| EA | 44 | 1430436 | -6 |
| STZ | 58 | 1231651 | 0 |
| A | 42 | 3464139 | -3 |
| RACE | 26 | 1257227 | -3 |
| Average | 39 | 1408205 | -2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1408 million. That figure was $966 million in VEEV’s case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand T. Rowe Price Group, Inc. (NASDAQ:TROW) is the least popular one with only 26 bullish hedge fund positions. Veeva Systems Inc (NYSE:VEEV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VEEV is 54.9. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on VEEV as the stock returned 19.6% since the end of the first quarter (through 6/25) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
