Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in V.F. Corporation (NYSE:VFC)? The smart money sentiment can provide an answer to this question.
V.F. Corporation (NYSE:VFC) shareholders have witnessed an increase in support from the world’s most elite money managers of late. VFC was in 29 hedge funds’ portfolios at the end of March. There were 27 hedge funds in our database with VFC positions at the end of the previous quarter. Our calculations also showed that vfc isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 take a peek at the recent hedge fund action surrounding V.F. Corporation (NYSE:VFC).
How have hedgies been trading V.F. Corporation (NYSE:VFC)?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards VFC over the last 15 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of V.F. Corporation (NYSE:VFC), with a stake worth $226 million reported as of the end of March. Trailing Arrowstreet Capital was Two Sigma Advisors, which amassed a stake valued at $174.9 million. Diamond Hill Capital, Millennium Management, and Samlyn Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, some big names have jumped into V.F. Corporation (NYSE:VFC) headfirst. Samlyn Capital, managed by Robert Pohly, initiated the most outsized position in V.F. Corporation (NYSE:VFC). Samlyn Capital had $80.8 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $29.5 million investment in the stock during the quarter. The following funds were also among the new VFC investors: Ray Dalio’s Bridgewater Associates, Sander Gerber’s Hudson Bay Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as V.F. Corporation (NYSE:VFC) but similarly valued. We will take a look at SYSCO Corporation (NYSE:SYY), Barclays PLC (NYSE:BCS), Autodesk, Inc. (NASDAQ:ADSK), and Moody’s Corporation (NYSE:MCO). This group of stocks’ market valuations resemble VFC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYY | 36 | 2944902 | 2 |
| BCS | 10 | 160567 | 0 |
| ADSK | 57 | 3695998 | -2 |
| MCO | 34 | 6446374 | 2 |
| Average | 34.25 | 3311960 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.25 hedge funds with bullish positions and the average amount invested in these stocks was $3312 million. That figure was $1091 million in VFC’s case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand Barclays PLC (NYSE:BCS) is the least popular one with only 10 bullish hedge fund positions. V.F. Corporation (NYSE:VFC) 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 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. A small number of hedge funds were also right about betting on VFC, though not to the same extent, as the stock returned 1.1% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
