Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57%. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 41.1% in 2019 (through December 23rd) and outperformed the broader market benchmark by 10.1 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
V.F. Corporation (NYSE:VFC) has experienced an increase in hedge fund interest lately. Our calculations also showed that VFC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
Today there are dozens of formulas stock traders employ to assess their holdings. A pair of the most underrated formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outclass their index-focused peers by a healthy amount (see the details here).
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to go over the fresh hedge fund action regarding V.F. Corporation (NYSE:VFC).
How have hedgies been trading V.F. Corporation (NYSE:VFC)?
Heading into the fourth quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. On the other hand, there were a total of 32 hedge funds with a bullish position in VFC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in V.F. Corporation (NYSE:VFC), which was worth $163.3 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $153.1 million worth of shares. Citadel Investment Group, Samlyn Capital, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Shellback Capital allocated the biggest weight to V.F. Corporation (NYSE:VFC), around 3.22% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, designating 2.08 percent of its 13F equity portfolio to VFC.
With a general bullishness amongst the heavyweights, specific money managers have jumped into V.F. Corporation (NYSE:VFC) headfirst. Samlyn Capital, managed by Robert Pohly, initiated the most outsized call position in V.F. Corporation (NYSE:VFC). Samlyn Capital had $46.8 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $43.8 million investment in the stock during the quarter. The following funds were also among the new VFC investors: Steven Boyd’s Armistice Capital, Ken Grossman and Glen Schneider’s SG Capital Management, and Donald Sussman’s Paloma Partners.
Let’s check out hedge fund activity in other stocks similar to V.F. Corporation (NYSE:VFC). These stocks are The Dow Chemical Company (NYSE:DOW), Valero Energy Corporation (NYSE:VLO), Ecopetrol S.A. (NYSE:EC), and Johnson Controls International plc (NYSE:JCI). This group of stocks’ market values are closest to VFC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOW | 32 | 285661 | -1 |
| VLO | 35 | 530355 | 0 |
| EC | 10 | 174854 | 0 |
| JCI | 22 | 598575 | 4 |
| Average | 24.75 | 397361 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $397 million. That figure was $920 million in VFC’s case. Valero Energy Corporation (NYSE:VLO) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 10 bullish hedge fund positions. V.F. Corporation (NYSE:VFC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on VFC as the stock returned 49.8% in 2019 (through December 23rd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
