Hedge Funds Are Cashing Out Of Viatris Inc. (VTRS)

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Viatris Inc. (NASDAQ:VTRS) changed recently.

Viatris Inc. (NASDAQ:VTRS) has seen a decrease in hedge fund interest recently. Viatris Inc. (NASDAQ:VTRS) was in 58 hedge funds’ portfolios at the end of March. The all time high for this statistic is 74. There were 67 hedge funds in our database with VTRS positions at the end of the fourth quarter. Our calculations also showed that VTRS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Bill Miller of Miller Value Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell 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 we’re going to take a peek at the new hedge fund action regarding Viatris Inc. (NASDAQ:VTRS).

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

At Q1’s end, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. By comparison, 49 hedge funds held shares or bullish call options in VTRS a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Among these funds, Laurion Capital Management held the most valuable stake in Viatris Inc. (NASDAQ:VTRS), which was worth $439.5 million at the end of the fourth quarter. On the second spot was Deerfield Management which amassed $240.6 million worth of shares. Camber Capital Management, Slate Path Capital, and Paulson & Co 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 Slate Path Capital allocated the biggest weight to Viatris Inc. (NASDAQ:VTRS), around 10.72% of its 13F portfolio. Courage Capital is also relatively very bullish on the stock, dishing out 7.33 percent of its 13F equity portfolio to VTRS.

Seeing as Viatris Inc. (NASDAQ:VTRS) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedgies that elected to cut their full holdings in the first quarter. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group cut the largest investment of all the hedgies tracked by Insider Monkey, worth about $46.9 million in stock. Frank Brosens’s fund, Taconic Capital, also said goodbye to its stock, about $29 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 9 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Viatris Inc. (NASDAQ:VTRS). These stocks are Tradeweb Markets Inc. (NASDAQ:TW), Qualtrics International Inc. (NASDAQ:XM), Jacobs Engineering Group Inc. (NYSE:J), Avantor, Inc. (NYSE:AVTR), QuantumScape Corporation (NYSE:QS), Sun Communities Inc (NYSE:SUI), and Genuine Parts Company (NYSE:GPC). This group of stocks’ market values resemble VTRS’s market value.

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As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $931 million. That figure was $1825 million in VTRS’s case. Avantor, Inc. (NYSE:AVTR) is the most popular stock in this table. On the other hand Jacobs Engineering Group Inc. (NYSE:J) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Viatris Inc. (NASDAQ:VTRS) is more popular among hedge funds. Our overall hedge fund sentiment score for VTRS is 69.5. 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. 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 returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on VTRS as the stock returned 13.4% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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