At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Vera Bradley, Inc. (NASDAQ:VRA) was in 18 hedge funds’ portfolios at the end of the first quarter of 2019. VRA has experienced an increase in support from the world’s most elite money managers lately. There were 17 hedge funds in our database with VRA positions at the end of the previous quarter. Our calculations also showed that VRA isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to go over the fresh hedge fund action encompassing Vera Bradley, Inc. (NASDAQ:VRA).
How have hedgies been trading Vera Bradley, Inc. (NASDAQ:VRA)?
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the fourth quarter of 2018. On the other hand, there were a total of 14 hedge funds with a bullish position in VRA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Vera Bradley, Inc. (NASDAQ:VRA), which was worth $17.3 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $17.2 million worth of shares. Moreover, Arrowstreet Capital, Royce & Associates, and Ancora Advisors were also bullish on Vera Bradley, Inc. (NASDAQ:VRA), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most outsized position in Vera Bradley, Inc. (NASDAQ:VRA). Marshall Wace LLP had $1.9 million invested in the company at the end of the quarter. Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital also made a $1 million investment in the stock during the quarter. The other funds with brand new VRA positions are Matthew Hulsizer’s PEAK6 Capital Management, Roger Ibbotson’s Zebra Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Vera Bradley, Inc. (NASDAQ:VRA). We will take a look at United Community Financial Corp (NASDAQ:UCFC), Tejon Ranch Company (NYSE:TRC), Oxford Immunotec Global PLC (NASDAQ:OXFD), and The Bancorp, Inc. (NASDAQ:TBBK). All of these stocks’ market caps match VRA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UCFC | 11 | 29850 | 3 |
| TRC | 11 | 80881 | -1 |
| OXFD | 17 | 167837 | 4 |
| TBBK | 16 | 68854 | 2 |
| Average | 13.75 | 86856 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $70 million in VRA’s case. Oxford Immunotec Global PLC (NASDAQ:OXFD) is the most popular stock in this table. On the other hand United Community Financial Corp (NASDAQ:UCFC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Vera Bradley, Inc. (NASDAQ:VRA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately VRA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VRA were disappointed as the stock returned -18.7% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
