Hedge Funds Are Buying Verra Mobility Corporation (VRRM)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Verra Mobility Corporation (NASDAQ:VRRM).

Is Verra Mobility Corporation (NASDAQ:VRRM) worth your attention right now? Money managers were in a bullish mood. The number of long hedge fund bets moved up by 3 recently. Verra Mobility Corporation (NASDAQ:VRRM) was in 25 hedge funds’ portfolios at the end of September. 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 Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s take a glance at the key hedge fund action regarding Verra Mobility Corporation (NASDAQ:VRRM).

Jeffrey Ubben, Founder of ValueAct Capital and Inclusive Capital Partners

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

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VRRM over the last 25 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Among these funds, Inclusive Capital held the most valuable stake in Verra Mobility Corporation (NASDAQ:VRRM), which was worth $134.1 million at the end of the third quarter. On the second spot was Scopia Capital which amassed $103.9 million worth of shares. Crescent Park Management, Cardinal Capital, and Sunriver 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 Inclusive Capital allocated the biggest weight to Verra Mobility Corporation (NASDAQ:VRRM), around 14.64% of its 13F portfolio. Scopia Capital is also relatively very bullish on the stock, setting aside 11.22 percent of its 13F equity portfolio to VRRM.

Consequently, key hedge funds were breaking ground themselves. HG Vora Capital Management, managed by Parag Vora, initiated the most outsized position in Verra Mobility Corporation (NASDAQ:VRRM). HG Vora Capital Management had $18.8 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also made a $2.4 million investment in the stock during the quarter. The other funds with brand new VRRM positions are Jeffrey Talpins’s Element Capital Management, Gregg Moskowitz’s Interval Partners, and Peter Algert’s Algert Global.

Let’s now take a look at hedge fund activity in other stocks similar to Verra Mobility Corporation (NASDAQ:VRRM). These stocks are Krispy Kreme Inc. (NASDAQ:DNUT), Tri Pointe Homes, Inc. (NYSE:TPH), Washington Federal Inc. (NASDAQ:WAFD), Otter Tail Corporation (NASDAQ:OTTR), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), TechTarget Inc (NASDAQ:TTGT), and Azul S.A. (NYSE:AZUL). This group of stocks’ market values are similar to VRRM’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $423 million in VRRM’s case. Tri Pointe Homes, Inc. (NYSE:TPH) is the most popular stock in this table. On the other hand Otter Tail Corporation (NASDAQ:OTTR) is the least popular one with only 8 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 75.5. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately VRRM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VRRM were disappointed as the stock returned -3.6% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.

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