Is Veritiv Corp (NYSE:VRTV) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Veritiv Corp (NYSE:VRTV) was in 9 hedge funds’ portfolios at the end of September. VRTV has seen a decrease in support from the world’s most elite money managers of late. There were 10 hedge funds in our database with VRTV positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Unisys Corporation (NYSE:UIS), Monmouth R.E. Inv. Corp. (NYSE:MNR), and Matrix Service Co (NASDAQ:MTRX) to gather more data points.
Follow Veritiv Corp (NYSE:VRTV)
Follow Veritiv Corp (NYSE:VRTV)
Today there are many signals market participants employ to evaluate their holdings. A duo of the best signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can trounce their index-focused peers by a significant amount (see the details here).
With all of this in mind, we’re going to analyze the latest action surrounding Veritiv Corp (NYSE:VRTV).
How have hedgies been trading Veritiv Corp (NYSE:VRTV)?
Heading into Q4, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 10% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Baupost Group, managed by Seth Klarman, holds the most valuable position in Veritiv Corp (NYSE:VRTV), worth approximately $104.1 million and comprising 1.7% of its 13F portfolio. The second largest stake is held by Marc Majzner of Clearline Capital, with a $7.6 million position; 1.3% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism consist of D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Chao Ku’s Nine Chapters Capital Management.
Due to the fact that Veritiv Corp (NYSE:VRTV) has witnessed falling interest from hedge fund managers, it’s safe to say that there were a few funds who sold off their entire stakes heading into Q4. At the top of the heap, Andre F. Perold’s HighVista Strategies said goodbye to the biggest stake of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $2.6 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its holding, about $0.8 million worth of VRTV shares. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Veritiv Corp (NYSE:VRTV) but similarly valued. We will take a look at Unisys Corporation (NYSE:UIS), Monmouth R.E. Inv. Corp. (NYSE:MNR), Matrix Service Co (NASDAQ:MTRX), and Heritage Insurance Holdings Inc (NYSE:HRTG). This group of stocks’ market valuations are closest to VRTV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UIS | 13 | 96457 | -3 |
| MNR | 8 | 23166 | -1 |
| MTRX | 14 | 81195 | 1 |
| HRTG | 13 | 85175 | 1 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $122 million in VRTV’s case, which we consider to be a good sign. Matrix Service Co (NASDAQ:MTRX) is the most popular stock in this table, while Monmouth R.E. Inv. Corp. (NYSE:MNR) is the least popular one with only 8 bullish hedge fund positions. Veritiv Corp (NYSE:VRTV) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MTRX might be a better candidate to consider a long position.