The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of Vroom, Inc. (NASDAQ:VRM).
Is Vroom, Inc. (NASDAQ:VRM) a healthy stock for your portfolio? Investors who are in the know were becoming hopeful. The number of long hedge fund bets moved up by 2 in recent months. Vroom, Inc. (NASDAQ:VRM) was in 23 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. Our calculations also showed that VRM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Richard Chilton of Chilton Investment Company
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. With all of this in mind we’re going to take a peek at the recent hedge fund action encompassing Vroom, Inc. (NASDAQ:VRM).
Do Hedge Funds Think VRM Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards VRM over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Vroom, Inc. (NASDAQ:VRM) was held by Miller Value Partners, which reported holding $45.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $16.6 million position. Other investors bullish on the company included Citadel Investment Group, Renaissance Technologies, and D E Shaw. In terms of the portfolio weights assigned to each position Yarra Square Partners allocated the biggest weight to Vroom, Inc. (NASDAQ:VRM), around 3.47% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, designating 1.04 percent of its 13F equity portfolio to VRM.
As industrywide interest jumped, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Vroom, Inc. (NASDAQ:VRM). Point72 Asset Management had $7.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $7.3 million position during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Jinghua Yan’s TwinBeech Capital, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to Vroom, Inc. (NASDAQ:VRM). We will take a look at Dorman Products Inc. (NASDAQ:DORM), CNO Financial Group Inc (NYSE:CNO), Werner Enterprises, Inc. (NASDAQ:WERN), Lions Gate Entertainment Corporation (NYSE:LGF-B), Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), Signify Health, Inc. (NYSE:SGFY), and Ameresco Inc (NYSE:AMRC). This group of stocks’ market caps match VRM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DORM | 17 | 74028 | -1 |
| CNO | 21 | 357135 | 0 |
| WERN | 16 | 162091 | -4 |
| LGF-B | 24 | 416264 | 2 |
| AXNX | 14 | 140707 | -8 |
| SGFY | 16 | 359994 | 3 |
| AMRC | 16 | 74034 | 1 |
| Average | 17.7 | 226322 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $226 million. That figure was $119 million in VRM’s case. Lions Gate Entertainment Corporation (NYSE:LGF-B) is the most popular stock in this table. On the other hand Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) is the least popular one with only 14 bullish hedge fund positions. Vroom, Inc. (NASDAQ:VRM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRM is 72.3. 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 VRM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VRM were disappointed as the stock returned -44.6% 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.
Follow Vroom Inc. (NASDAQ:VRM)
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Disclosure: None. This article was originally published at Insider Monkey.
