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. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Things completely reversed during the first half of 2019. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Verisk Analytics, Inc. (NASDAQ:VRSK) to find out whether it was one of their high conviction long-term ideas.
Is Verisk Analytics, Inc. (NASDAQ:VRSK) undervalued? Money managers are getting more optimistic. The number of long hedge fund positions moved up by 10 lately. Our calculations also showed that VRSK isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most investors, hedge funds are perceived as worthless, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at present, We hone in on the masters of this club, approximately 750 funds. These investment experts control the lion’s share of the hedge fund industry’s total capital, and by watching their inimitable investments, Insider Monkey has revealed many investment strategies that have historically outpaced the market. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the recent hedge fund action surrounding Verisk Analytics, Inc. (NASDAQ:VRSK).
Hedge fund activity in Verisk Analytics, Inc. (NASDAQ:VRSK)
At Q2’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the first quarter of 2019. On the other hand, there were a total of 28 hedge funds with a bullish position in VRSK a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Akre Capital Management held the most valuable stake in Verisk Analytics, Inc. (NASDAQ:VRSK), which was worth $372.5 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $59.2 million worth of shares. Moreover, Renaissance Technologies, Millennium Management, and Adage Capital Management were also bullish on Verisk Analytics, Inc. (NASDAQ:VRSK), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key money managers were leading the bulls’ herd. Renaissance Technologies, assembled the most outsized position in Verisk Analytics, Inc. (NASDAQ:VRSK). Renaissance Technologies had $37.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $36.7 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Matthew Tewksbury’s Stevens Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Verisk Analytics, Inc. (NASDAQ:VRSK) but similarly valued. We will take a look at Synchrony Financial (NYSE:SYF), Fresenius Medical Care AG & Co. KGaA (NYSE:FMS), Ball Corporation (NYSE:BLL), and Zimmer Biomet Holdings Inc (NYSE:ZBH). This group of stocks’ market values are closest to VRSK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYF | 46 | 2515446 | 1 |
| FMS | 9 | 9059 | 2 |
| BLL | 27 | 668641 | 0 |
| ZBH | 42 | 1424896 | 7 |
| Average | 31 | 1154511 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1155 million. That figure was $694 million in VRSK’s case. Synchrony Financial (NYSE:SYF) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) is the least popular one with only 9 bullish hedge fund positions. Verisk Analytics, Inc. (NASDAQ:VRSK) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks (see the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on VRSK as the stock returned 8.1% during the same time frame and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
