In this article we will analyze whether Virtus Investment Partners Inc (NASDAQ:VRTS) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Virtus Investment Partners Inc (NASDAQ:VRTS) shareholders have witnessed an increase in hedge fund interest of late. Virtus Investment Partners Inc (NASDAQ:VRTS) was in 21 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 20 hedge funds in our database with VRTS positions at the end of the first quarter. Our calculations also showed that VRTS isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 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.
Matthew Lindenbaum of Basswood Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Keeping this in mind let’s go over the fresh hedge fund action surrounding Virtus Investment Partners Inc (NASDAQ:VRTS).
Do Hedge Funds Think VRTS Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VRTS over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Virtus Investment Partners Inc (NASDAQ:VRTS) was held by Millennium Management, which reported holding $35.6 million worth of stock at the end of June. It was followed by Basswood Capital with a $24 million position. Other investors bullish on the company included Steamboat Capital Partners, Schonfeld Strategic Advisors, and AWH Capital. In terms of the portfolio weights assigned to each position AWH Capital allocated the biggest weight to Virtus Investment Partners Inc (NASDAQ:VRTS), around 11.56% of its 13F portfolio. Steamboat Capital Partners is also relatively very bullish on the stock, setting aside 5 percent of its 13F equity portfolio to VRTS.
With a general bullishness amongst the heavyweights, key money managers have jumped into Virtus Investment Partners Inc (NASDAQ:VRTS) headfirst. Basswood Capital, managed by Matthew Lindenbaum, created the biggest position in Virtus Investment Partners Inc (NASDAQ:VRTS). Basswood Capital had $24 million invested in the company at the end of the quarter. Parsa Kiai’s Steamboat Capital Partners also made a $19.4 million investment in the stock during the quarter. The only other fund with a brand new VRTS position is Mika Toikka’s AlphaCrest Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Virtus Investment Partners Inc (NASDAQ:VRTS) but similarly valued. We will take a look at B&G Foods, Inc. (NYSE:BGS), Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), Realogy Holdings Corp (NYSE:RLGY), Revance Therapeutics Inc (NASDAQ:RVNC), Rush Enterprises, Inc. (NASDAQ:RUSHB), Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY), and Nano Dimension Ltd. (NASDAQ:NNDM). This group of stocks’ market caps are closest to VRTS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BGS | 10 | 10330 | 0 |
| DCPH | 23 | 568335 | 0 |
| RLGY | 18 | 277899 | -4 |
| RVNC | 12 | 153216 | 2 |
| RUSHB | 5 | 46515 | 1 |
| SNCY | 12 | 189316 | -8 |
| NNDM | 11 | 173997 | 0 |
| Average | 13 | 202801 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $165 million in VRTS’s case. Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 5 bullish hedge fund positions. Virtus Investment Partners Inc (NASDAQ:VRTS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRTS is 80.4. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on VRTS as the stock returned 17.4% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Virtus Investment Partners Inc. (NASDAQ:VRTS)
Follow Virtus Investment Partners Inc. (NASDAQ:VRTS)
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Disclosure: None. This article was originally published at Insider Monkey.
