Hedge Funds Are Betting On Vital Farms, Inc. (VITL)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Vital Farms, Inc. (NASDAQ:VITL) in this article.

Vital Farms, Inc. (NASDAQ:VITL) investors should pay attention to an increase in hedge fund sentiment lately. Vital Farms, Inc. (NASDAQ:VITL) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 11. Our calculations also showed that VITL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to check out the latest hedge fund action regarding Vital Farms, Inc. (NASDAQ:VITL).

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

At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in VITL 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.

The largest stake in Vital Farms, Inc. (NASDAQ:VITL) was held by Marshall Wace LLP, which reported holding $6.3 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $3.3 million position. Other investors bullish on the company included Inherent Group, Millennium Management, and PDT Partners. In terms of the portfolio weights assigned to each position Inherent Group allocated the biggest weight to Vital Farms, Inc. (NASDAQ:VITL), around 0.2% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to VITL.

Consequently, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most valuable position in Vital Farms, Inc. (NASDAQ:VITL). Millennium Management had $2 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $1 million position during the quarter. The other funds with brand new VITL positions are Michael Gelband’s ExodusPoint Capital, D. E. Shaw’s D E Shaw, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Vital Farms, Inc. (NASDAQ:VITL) but similarly valued. These stocks are Unitil Corporation (NYSE:UTL), Magic Software Enterprises Ltd. (NASDAQ:MGIC), Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL), Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH), Genco Shipping & Trading Limited (NYSE:GNK), Solar Capital Ltd. (NASDAQ:SLRC), and Seritage Growth Properties (NYSE:SRG). All of these stocks’ market caps are closest to VITL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $18 million in VITL’s case. Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) is the most popular stock in this table. On the other hand Unitil Corporation (NYSE:UTL) is the least popular one with only 4 bullish hedge fund positions. Vital Farms, Inc. (NASDAQ:VITL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VITL is 52. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately VITL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); VITL investors were disappointed as the stock returned -5.9% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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

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