A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Verra Mobility Corporation (NASDAQ:VRRM).
Verra Mobility Corporation (NASDAQ:VRRM) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. Verra Mobility Corporation (NASDAQ:VRRM) was in 18 hedge funds’ portfolios at the end of March. The all time high for this statistic is 33. Our calculations also showed that VRRM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Parag Vora of HG Vora Capital Management
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Do Hedge Funds Think VRRM Is A Good Stock To Buy Now?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the fourth quarter of 2020. By comparison, 23 hedge funds held shares or bullish call options in VRRM a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Verra Mobility Corporation (NASDAQ:VRRM) was held by Inclusive Capital, which reported holding $96.1 million worth of stock at the end of December. It was followed by Scopia Capital with a $87.8 million position. Other investors bullish on the company included Tremblant Capital, Crescent Park Management, and Sirios Capital Management. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to Verra Mobility Corporation (NASDAQ:VRRM), around 10.88% of its 13F portfolio. Inclusive Capital is also relatively very bullish on the stock, designating 7.14 percent of its 13F equity portfolio to VRRM.
Because Verra Mobility Corporation (NASDAQ:VRRM) has experienced a decline in interest from the smart money, we can see that there exists a select few money managers that slashed their entire stakes by the end of the first quarter. At the top of the heap, Parag Vora’s HG Vora Capital Management cut the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth close to $17.4 million in stock, and Rishi Renjen’s ROAM Global Management was right behind this move, as the fund dropped about $3.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 4 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Verra Mobility Corporation (NASDAQ:VRRM) but similarly valued. These stocks are Mednax Inc. (NYSE:MD), Cloopen Group Holding Limited (NYSE:RAAS), Transocean Ltd (NYSE:RIG), Rambus Inc. (NASDAQ:RMBS), DiamondRock Hospitality Company (NYSE:DRH), Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB), and Calix Inc (NYSE:CALX). This group of stocks’ market valuations are similar to VRRM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MD | 11 | 260855 | -7 |
| RAAS | 14 | 36938 | 14 |
| RIG | 20 | 148582 | 3 |
| RMBS | 23 | 294753 | 0 |
| DRH | 11 | 118667 | -2 |
| OMAB | 4 | 29537 | -1 |
| CALX | 31 | 273135 | 6 |
| Average | 16.3 | 166067 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $338 million in VRRM’s case. Calix Inc (NYSE:CALX) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB) is the least popular one with only 4 bullish hedge fund positions. Verra Mobility Corporation (NASDAQ:VRRM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRRM is 43.3. 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Hedge funds were also right about betting on VRRM, though not to the same extent, as the stock returned 13.5% since Q1 (through July 23rd) and outperformed the market as well.
Follow Verra Mobility Corp (NASDAQ:VRRM)
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Disclosure: None. This article was originally published at Insider Monkey.
