Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Vera Bradley, Inc. (NASDAQ:VRA) has experienced an increase in activity from the world’s largest hedge funds recently. VRA was in 23 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with VRA positions at the end of the previous quarter. Our calculations also showed that VRA isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s review the fresh hedge fund action regarding Vera Bradley, Inc. (NASDAQ:VRA).
What have hedge funds been doing with Vera Bradley, Inc. (NASDAQ:VRA)?
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 53% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VRA over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Vera Bradley, Inc. (NASDAQ:VRA), which was worth $27.3 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $13.2 million worth of shares. Moreover, Point72 Asset Management, Millennium Management, and Arrowstreet Capital were also bullish on Vera Bradley, Inc. (NASDAQ:VRA), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, some big names have jumped into Vera Bradley, Inc. (NASDAQ:VRA) headfirst. Think Investments, managed by Shashin Shah, established the biggest position in Vera Bradley, Inc. (NASDAQ:VRA). Think Investments had $6.2 million invested in the company at the end of the quarter. Frederick DiSanto’s Ancora Advisors also made a $3.5 million investment in the stock during the quarter. The following funds were also among the new VRA investors: Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s go over hedge fund activity in other stocks similar to Vera Bradley, Inc. (NASDAQ:VRA). These stocks are Mobileiron Inc (NASDAQ:MOBL), AC Immune SA (NASDAQ:ACIU), America’s Car-Mart, Inc. (NASDAQ:CRMT), and Arvinas Holding Company, LLC (NASDAQ:ARVN). This group of stocks’ market values are similar to VRA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOBL | 12 | 51984 | 0 |
| ACIU | 9 | 59456 | 5 |
| CRMT | 16 | 88669 | 3 |
| ARVN | 17 | 152558 | 17 |
| Average | 13.5 | 88167 | 6.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $105 million in VRA’s case. 0 is the most popular stock in this table. On the other hand AC Immune SA (NASDAQ:ACIU) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Vera Bradley, Inc. (NASDAQ:VRA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
