Hedge Funds Aren’t Crazy About Virtusa Corporation (VRTU) Anymore

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Virtusa Corporation (NASDAQ:VRTU) was in 7 hedge funds’ portfolios at the end of September. VRTU has seen a decrease in hedge fund interest in recent months. There were 11 hedge funds in our database with VRTU positions at the end of the previous quarter. At the end of this article we will also compare VRTU to other stocks including CEVA, Inc. (NASDAQ:CEVA), Speedway Motorsports, Inc. (NYSE:TRK), and Piper Jaffray Companies (NYSE:PJC) to get a better sense of its popularity.

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Keeping this in mind, we’re going to go over the fresh action regarding Virtusa Corporation (NASDAQ:VRTU).

Hedge fund activity in Virtusa Corporation (NASDAQ:VRTU)

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a plunge of 36% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VRTU over the last 5 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, George McCabe’s Portolan Capital Management has the most valuable position in Virtusa Corporation (NASDAQ:VRTU), worth close to $7.9 million, accounting for 1.1% of its total 13F portfolio. The second most bullish fund manager is P.A.W. CAPITAL PARTNERS, led by Peter A. Wright, holding a $6.2 million position; 6.6% of its 13F portfolio is allocated to the company. Other peers that are bullish encompass Ken Griffin’s Citadel Investment Group, Warren Lammert’s Granite Point Capital and Roger Ibbotson’s Zebra Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Seeing as Virtusa Corporation (NASDAQ:VRTU) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few money managers who were dropping their positions entirely heading into Q4. Interestingly, Renaissance Technologies, one of the biggest hedge funds in the world, dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $3.8 million in stock. Paul Hondros’s fund, AlphaOne Capital Partners, also sold off its stock, about $1.9 million worth of VRTU shares.

Let’s also examine hedge fund activity in other stocks similar to Virtusa Corporation (NASDAQ:VRTU). We will take a look at CEVA, Inc. (NASDAQ:CEVA), Speedway Motorsports, Inc. (NYSE:TRK), Piper Jaffray Companies (NYSE:PJC), and Silver Spring Networks Inc (NYSE:SSNI). This group of stocks’ market values are closest to VRTU’s market value.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $18 million in VRTU’s case. CEVA, Inc. (NASDAQ:CEVA) is the most popular stock in this table. On the other hand Piper Jaffray Companies (NYSE:PJC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Virtusa Corporation (NASDAQ:VRTU) is even less popular than PJC. 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.

Disclosure: none.