We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards V.F. Corporation (NYSE:VFC).
V.F. Corporation (NYSE:VFC) has seen an increase in hedge fund interest lately. Our calculations also showed that VFC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the fresh hedge fund action surrounding V.F. Corporation (NYSE:VFC).
Hedge fund activity in V.F. Corporation (NYSE:VFC)
At Q3’s end, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards VFC over the last 17 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the number one position in V.F. Corporation (NYSE:VFC), worth close to $163.3 million, accounting for 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $153.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions include Ken Griffin’s Citadel Investment Group, Robert Pohly’s Samlyn Capital and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Shellback Capital allocated the biggest weight to V.F. Corporation (NYSE:VFC), around 3.22% of its portfolio. SG Capital Management is also relatively very bullish on the stock, earmarking 2.08 percent of its 13F equity portfolio to VFC.
As aggregate interest increased, key money managers were breaking ground themselves. Samlyn Capital, managed by Robert Pohly, created the biggest call position in V.F. Corporation (NYSE:VFC). Samlyn Capital had $46.8 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $43.8 million investment in the stock during the quarter. The following funds were also among the new VFC investors: Steven Boyd’s Armistice Capital, Ken Grossman and Glen Schneider’s SG Capital Management, and Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks similar to V.F. Corporation (NYSE:VFC). We will take a look at Dow Inc. (NYSE:DOW), Valero Energy Corporation (NYSE:VLO), Ecopetrol S.A. (NYSE:EC), and Johnson Controls International plc (NYSE:JCI). This group of stocks’ market values are similar to VFC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOW | 32 | 285661 | -1 |
| VLO | 35 | 530355 | 0 |
| EC | 10 | 174854 | 0 |
| JCI | 22 | 598575 | 4 |
| Average | 24.75 | 397361 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $397 million. That figure was $920 million in VFC’s case. Valero Energy Corporation (NYSE:VLO) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 10 bullish hedge fund positions. V.F. Corporation (NYSE:VFC) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately VFC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VFC were disappointed as the stock returned -0.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
