Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Veeva Systems Inc (NYSE:VEEV) to find out whether there were any major changes in hedge funds’ views.
Veeva Systems Inc (NYSE:VEEV) has seen an increase in activity from the world’s largest hedge funds of late. Veeva Systems Inc (NYSE:VEEV) was in 44 hedge funds’ portfolios at the end of June. The all time high for this statistic is 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that VEEV isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Do Hedge Funds Think VEEV Is A Good Stock To Buy Now?
At Q2’s end, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards VEEV over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Catherine D. Wood’s ARK Investment Management has the number one position in Veeva Systems Inc (NYSE:VEEV), worth close to $272.3 million, corresponding to 0.5% of its total 13F portfolio. On ARK Investment Management’s heels is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $186 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise Ken Griffin’s Citadel Investment Group, Brandon Haley’s Holocene Advisors and Greg Poole’s Echo Street Capital Management. In terms of the portfolio weights assigned to each position 1623 Capital allocated the biggest weight to Veeva Systems Inc (NYSE:VEEV), around 4.12% of its 13F portfolio. Montanaro Asset Management is also relatively very bullish on the stock, setting aside 3.74 percent of its 13F equity portfolio to VEEV.
Consequently, some big names were leading the bulls’ herd. Holocene Advisors, managed by Brandon Haley, created the biggest call position in Veeva Systems Inc (NYSE:VEEV). Holocene Advisors had $86.8 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $35 million investment in the stock during the quarter. The other funds with new positions in the stock are Chen Tianqiao’s Shanda Asset Management, Louis Bacon’s Moore Global Investments, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Veeva Systems Inc (NYSE:VEEV) but similarly valued. We will take a look at Dow Inc. (NYSE:DOW), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), Bilibili Inc. (NASDAQ:BILI), IQVIA Holdings, Inc. (NYSE:IQV), Walgreens Boots Alliance Inc (NASDAQ:WBA), National Grid plc (NYSE:NGG), and Koninklijke Philips NV (NYSE:PHG). This group of stocks’ market valuations resemble VEEV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOW | 40 | 518571 | -1 |
| SMFG | 11 | 59990 | -3 |
| BILI | 47 | 2001370 | -6 |
| IQV | 69 | 3809269 | 7 |
| WBA | 41 | 1113117 | 0 |
| NGG | 7 | 352045 | -2 |
| PHG | 10 | 122622 | -1 |
| Average | 32.1 | 1139569 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1140 million. That figure was $1544 million in VEEV’s case. IQVIA Holdings, Inc. (NYSE:IQV) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 7 bullish hedge fund positions. Veeva Systems Inc (NYSE:VEEV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VEEV is 69.8. 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 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately VEEV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VEEV were disappointed as the stock returned -7.6% since the end of June (through 10/1) 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 Veeva Systems Inc (NYSE:VEEV)
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Disclosure: None. This article was originally published at Insider Monkey.
