Hedge Funds Are Buying Verisk Analytics, Inc. (VRSK)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Verisk Analytics, Inc. (NASDAQ:VRSK), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Verisk Analytics, Inc. (NASDAQ:VRSK) worth your attention right now? Prominent investors were turning bullish. The number of bullish hedge fund positions increased by 2 in recent months. Verisk Analytics, Inc. (NASDAQ:VRSK) was in 34 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that VRSK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Michael Gelband of ExodusPoint Capital

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 battery 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. Now let’s view the recent hedge fund action surrounding Verisk Analytics, Inc. (NASDAQ:VRSK).

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

At first quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in VRSK a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in Verisk Analytics, Inc. (NASDAQ:VRSK) was held by Akre Capital Management, which reported holding $432.6 million worth of stock at the end of December. It was followed by Impax Asset Management with a $377.2 million position. Other investors bullish on the company included GuardCap Asset Management, Echo Street Capital Management, and Ako Capital. In terms of the portfolio weights assigned to each position Akre Capital Management allocated the biggest weight to Verisk Analytics, Inc. (NASDAQ:VRSK), around 2.94% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, designating 2.71 percent of its 13F equity portfolio to VRSK.

As industrywide interest jumped, some big names have been driving this bullishness. GuardCap Asset Management, managed by Guardian Capital, established the most outsized position in Verisk Analytics, Inc. (NASDAQ:VRSK). GuardCap Asset Management had $140.2 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $17.4 million position during the quarter. The following funds were also among the new VRSK investors: Brandon Haley’s Holocene Advisors, Michael Gelband’s ExodusPoint Capital, and Mikal Patel’s Oribel Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Verisk Analytics, Inc. (NASDAQ:VRSK). These stocks are Best Buy Co., Inc. (NYSE:BBY), Waste Connections, Inc. (NYSE:WCN), ResMed Inc. (NYSE:RMD), KKR & Co Inc. (NYSE:KKR), Old Dominion Freight Line (NASDAQ:ODFL), Unity Software Inc. (NYSE:U), and Ball Corporation (NYSE:BLL). This group of stocks’ market caps are closest to VRSK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.4 hedge funds with bullish positions and the average amount invested in these stocks was $2229 million. That figure was $1585 million in VRSK’s case. KKR & Co Inc. (NYSE:KKR) is the most popular stock in this table. On the other hand ResMed Inc. (NYSE:RMD) is the least popular one with only 25 bullish hedge fund positions. Verisk Analytics, Inc. (NASDAQ:VRSK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VRSK is 47. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately VRSK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); VRSK investors were disappointed as the stock returned -1% since the end of March (through 6/25) 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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