Hedge Funds Are Cashing Out Of Verisign, Inc. (VRSN)

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Verisign, Inc. (NASDAQ:VRSN) makes for a good investment right now.

Verisign, Inc. (NASDAQ:VRSN) investors should pay attention to a decrease in support from the world’s most elite money managers lately. Verisign, Inc. (NASDAQ:VRSN) was in 41 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 47. Our calculations also showed that VRSN 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.

William Von Mueffling of Cantillon Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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 let’s take a peek at the recent hedge fund action surrounding Verisign, Inc. (NASDAQ:VRSN).

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

At the end of the second quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VRSN over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Berkshire Hathaway held the most valuable stake in Verisign, Inc. (NASDAQ:VRSN), which was worth $2918 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $1102.3 million worth of shares. Cantillon Capital Management, D E Shaw, and Stockbridge Partners 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 Yost Capital Management allocated the biggest weight to Verisign, Inc. (NASDAQ:VRSN), around 16.98% of its 13F portfolio. Lunia Capital is also relatively very bullish on the stock, designating 8.58 percent of its 13F equity portfolio to VRSN.

Seeing as Verisign, Inc. (NASDAQ:VRSN) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few funds that decided to sell off their positions entirely heading into Q3. Interestingly, Andreas Halvorsen’s Viking Global said goodbye to the largest investment of all the hedgies watched by Insider Monkey, comprising an estimated $137.2 million in stock, and Robert Joseph Caruso’s Select Equity Group was right behind this move, as the fund dropped about $46.7 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds heading into Q3.

Let’s now review hedge fund activity in other stocks similar to Verisign, Inc. (NASDAQ:VRSN). These stocks are Telefonica S.A. (NYSE:TEF), Consolidated Edison, Inc. (NYSE:ED), Realty Income Corporation (NYSE:O), DTE Energy Company (NYSE:DTE), ZTO Express (Cayman) Inc. (NYSE:ZTO), Enphase Energy Inc (NASDAQ:ENPH), and Royalty Pharma Plc (NASDAQ:RPRX). This group of stocks’ market caps are closest to VRSN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $643 million. That figure was $6102 million in VRSN’s case. Enphase Energy Inc (NASDAQ:ENPH) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 4 bullish hedge fund positions. Verisign, Inc. (NASDAQ:VRSN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRSN is 76.4. 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 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately VRSN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VRSN were disappointed as the stock returned -10% since the end of June (through 10/11) 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.