Hedge Funds Are Selling Verint Systems Inc. (VRNT)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Verint Systems Inc. (NASDAQ:VRNT).

Is Verint Systems Inc. (NASDAQ:VRNT) an attractive investment right now? Money managers were becoming less hopeful. The number of long hedge fund positions shrunk by 5 recently. Verint Systems Inc. (NASDAQ:VRNT) was in 25 hedge funds’ portfolios at the end of September. The all time high for this statistic is 36. Our calculations also showed that VRNT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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 review the key hedge fund action surrounding Verint Systems Inc. (NASDAQ:VRNT).

Seth Klarman of Baupost Group

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

At third quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 27 hedge funds with a bullish position in VRNT a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Verint Systems Inc. (NASDAQ:VRNT) was held by Rima Senvest Management, which reported holding $177.3 million worth of stock at the end of September. It was followed by Baupost Group with a $158 million position. Other investors bullish on the company included RGM Capital, Cardinal Capital, and Fisher Asset Management. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to Verint Systems Inc. (NASDAQ:VRNT), around 7% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, setting aside 5.07 percent of its 13F equity portfolio to VRNT.

Judging by the fact that Verint Systems Inc. (NASDAQ:VRNT) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that elected to cut their positions entirely heading into Q4. At the top of the heap, Steven Ng and Andrew Mitchell’s Ophir Asset Management sold off the largest position of the 750 funds followed by Insider Monkey, totaling an estimated $23 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $2.6 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 5 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Verint Systems Inc. (NASDAQ:VRNT) but similarly valued. These stocks are Relay Therapeutics, Inc. (NASDAQ:RLAY), Urban Outfitters, Inc. (NASDAQ:URBN), John Wiley & Sons Inc (NYSE:JW), J&J Snack Foods Corp. (NASDAQ:JJSF), First Advantage Corporation (NASDAQ:FA), Vishay Intertechnology, Inc. (NYSE:VSH), and Atea Pharmaceuticals, Inc. (NASDAQ:AVIR). This group of stocks’ market values are closest to VRNT’s market value.

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As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $595 million. That figure was $708 million in VRNT’s case. Vishay Intertechnology, Inc. (NYSE:VSH) is the most popular stock in this table. On the other hand John Wiley & Sons Inc (NYSE:JW) is the least popular one with only 14 bullish hedge fund positions. Verint Systems Inc. (NASDAQ:VRNT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRNT is 60.1. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on VRNT as the stock returned 9.1% since the end of Q3 (through 12/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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