Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Vanguard Short Term Corporate Bond ETF (NASDAQ:VCSH) to find out whether it was one of their high conviction long-term ideas.
Vanguard Short Term Corporate Bond ETF was in 4 hedge funds’ portfolios at the end of September. VCSH shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 6 hedge funds in our database with VCSH positions at the end of the previous quarter. At the end of this article we will also compare VCSH to other stocks including Enbridge Energy Partners, L.P. (NYSE:EEP), CF Industries Holdings, Inc. (NYSE:CF), and Discovery Communications Inc. (NASDAQ:DISCK) to get a better sense of its popularity.
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Now, we’re going to check out the new action regarding Vanguard Short Term Corporate Bond ETF (NASDAQ:VCSH).
How are hedge funds trading Vanguard Short Term Corporate Bond ETF (NASDAQ:VCSH)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Horizon Asset Management, managed by Murray Stahl, holds the biggest position in Vanguard Short Term Corporate Bond ETF (NASDAQ:VCSH). Horizon Asset Management has a $14 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by J. Alan Reid, Jr.’ Forward Management, with a $3.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism consist of Ken Fisher’s Fisher Asset Management and Mario Gabelli’s GAMCO Investors.
Seeing as Vanguard Short Term Corporate Bond ETF (NASDAQ:VCSH) has experienced falling interest from hedge fund managers, we can see that there exists a select few hedgies who were dropping their full holdings heading into Q4. It’s worth mentioning that Steven Owsley’s Madison Street Partners cut the largest stake of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $0.7 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $0.4 million worth of shares. These moves are important to note, as total hedge fund interest was cut by 2 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Vanguard Short Term Corporate Bond ETF (NASDAQ:VCSH). These stocks are Enbridge Energy Partners, L.P. (NYSE:EEP), CF Industries Holdings, Inc. (NYSE:CF), Discovery Communications Inc. (NASDAQ:DISCK), and Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA). This group of stocks’ market caps are closest to VCSH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EEP | 7 | 19137 | 0 |
| CF | 50 | 1908161 | 3 |
| DISCK | 26 | 371588 | 1 |
| ULTA | 30 | 1878474 | -2 |
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1.04 billion. That figure was just $19 million in VCSH’s case. CF Industries Holdings, Inc. (NYSE:CF) is the most popular stock in this table. On the other hand Enbridge Energy Partners, L.P. (NYSE:EEP) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Vanguard Short Term Corporate Bond ETF (NASDAQ:VCSH) is even less popular than EEP. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.