Do Hedge Funds Love Verisign, Inc. (VRSN)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Verisign, Inc. (NASDAQ:VRSN) changed recently.

Verisign, Inc. (NASDAQ:VRSN) shareholders have witnessed a decrease in enthusiasm from smart money lately. Verisign, Inc. (NASDAQ:VRSN) was in 40 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 47. There were 41 hedge funds in our database with VRSN positions at the end of the second quarter. Our calculations also showed that VRSN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind we’re going to take a gander at the fresh hedge fund action encompassing Verisign, Inc. (NASDAQ:VRSN).

Warren Buffett of Berkshire Hathaway

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

At the end of the third quarter, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards VRSN over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Warren Buffett’s Berkshire Hathaway has the most valuable position in Verisign, Inc. (NASDAQ:VRSN), worth close to $2.6273 billion, corresponding to 0.9% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $947.5 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass William von Mueffling’s Cantillon Capital Management, D. E. Shaw’s D E Shaw and Sharlyn C. Heslam’s Stockbridge Partners. In terms of the portfolio weights assigned to each position Yost Capital Management allocated the biggest weight to Verisign, Inc. (NASDAQ:VRSN), around 14.77% of its 13F portfolio. Atalan Capital is also relatively very bullish on the stock, earmarking 6.77 percent of its 13F equity portfolio to VRSN.

Because Verisign, Inc. (NASDAQ:VRSN) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedge funds that slashed their full holdings last quarter. At the top of the heap, Donald Sussman’s Paloma Partners cut the biggest position of the “upper crust” of funds watched by Insider Monkey, worth about $6.5 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Prelude Capital (previously Springbok Capital), also cut its stock, about $3.9 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Verisign, Inc. (NASDAQ:VRSN). These stocks are Huntington Bancshares Incorporated (NASDAQ:HBAN), ORIX Corporation (NYSE:IX), Invitation Homes Inc. (NYSE:INVH), Catalent Inc (NYSE:CTLT), Ginkgo Bioworks Holdings Inc. (NYSE:DNA), Royal Caribbean Cruises Ltd. (NYSE:RCL), and Magna International Inc. (NYSE:MGA). This group of stocks’ market valuations are similar to VRSN’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $1280 million. That figure was $5399 million in VRSN’s case. Catalent Inc (NYSE:CTLT) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Verisign, Inc. (NASDAQ:VRSN) is more popular among hedge funds. Our overall hedge fund sentiment score for VRSN is 79.5. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on VRSN as the stock returned 17% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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