In this article you are going to find out whether hedge funds think Veru Inc. (NASDAQ:VERU) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Veru Inc. (NASDAQ:VERU) worth your attention right now? Investors who are in the know are becoming hopeful. The number of long hedge fund bets increased by 1 recently. Our calculations also showed that VERU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most shareholders, hedge funds are viewed as unimportant, outdated investment tools of the past. While there are greater than 8000 funds in operation at present, Our researchers hone in on the bigwigs of this club, about 850 funds. Most estimates calculate that this group of people command most of the smart money’s total asset base, and by watching their top equity investments, Insider Monkey has spotted a few investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s check out the latest hedge fund action encompassing Veru Inc. (NASDAQ:VERU).
Hedge fund activity in Veru Inc. (NASDAQ:VERU)
At Q1’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 2 hedge funds with a bullish position in VERU a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Perceptive Advisors was the largest shareholder of Veru Inc. (NASDAQ:VERU), with a stake worth $5.4 million reported as of the end of September. Trailing Perceptive Advisors was Renaissance Technologies, which amassed a stake valued at $3.8 million. Millennium Management, Caxton Associates LP, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to Veru Inc. (NASDAQ:VERU), around 0.14% of its 13F portfolio. Caxton Associates LP is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to VERU.
Consequently, specific money managers were leading the bulls’ herd. Caxton Associates LP, managed by Bruce Kovner, created the most outsized position in Veru Inc. (NASDAQ:VERU). Caxton Associates LP had $0.3 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new VERU position is Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Veru Inc. (NASDAQ:VERU) but similarly valued. These stocks are New Senior Investment Group Inc (NYSE:SNR), Capital Southwest Corporation (NASDAQ:CSWC), Gritstone Oncology, Inc. (NASDAQ:GRTS), and AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG). This group of stocks’ market values match VERU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNR | 10 | 33204 | -5 |
| CSWC | 7 | 10362 | -6 |
| GRTS | 7 | 44260 | 1 |
| AMAG | 12 | 92458 | 0 |
| Average | 9 | 45071 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $13 million in VERU’s case. AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) is the most popular stock in this table. On the other hand Capital Southwest Corporation (NASDAQ:CSWC) is the least popular one with only 7 bullish hedge fund positions. Veru Inc. (NASDAQ:VERU) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately VERU wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); VERU investors were disappointed as the stock returned 2.1% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
