Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the second quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 6.6 percentage points through May 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Verisk Analytics, Inc. (NASDAQ:VRSK) was in 20 hedge funds’ portfolios at the end of the first quarter of 2019. VRSK shareholders have witnessed a decrease in enthusiasm from smart money recently. There were 30 hedge funds in our database with VRSK positions at the end of the previous quarter. Our calculations also showed that vrsk isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most stock holders, hedge funds are seen as unimportant, old investment vehicles of years past. While there are more than 8000 funds trading at the moment, Our experts choose to focus on the elite of this club, about 750 funds. These money managers watch over bulk of all hedge funds’ total asset base, and by keeping track of their unrivaled investments, Insider Monkey has spotted various investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We’re going to take a peek at the fresh hedge fund action regarding Verisk Analytics, Inc. (NASDAQ:VRSK).
How are hedge funds trading Verisk Analytics, Inc. (NASDAQ:VRSK)?
At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options 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 increasing their holdings meaningfully (or already accumulated large positions).
The largest stake in Verisk Analytics, Inc. (NASDAQ:VRSK) was held by Akre Capital Management, which reported holding $338.3 million worth of stock at the end of March. It was followed by Diamond Hill Capital with a $59.4 million position. Other investors bullish on the company included Adage Capital Management, Echo Street Capital Management, and AQR Capital Management.
Seeing as Verisk Analytics, Inc. (NASDAQ:VRSK) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there were a few fund managers who sold off their full holdings by the end of the third quarter. Intriguingly, Thomas Steyer’s Farallon Capital sold off the biggest investment of the 700 funds watched by Insider Monkey, valued at close to $157.1 million in stock. James Parsons’s fund, Junto Capital Management, also cut its stock, about $50.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 10 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Verisk Analytics, Inc. (NASDAQ:VRSK). These stocks are M&T Bank Corporation (NYSE:MTB), IHS Markit Ltd. (NASDAQ:INFO), Verisign, Inc. (NASDAQ:VRSN), and Rogers Communications Inc. (NYSE:RCI). This group of stocks’ market values match VRSK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTB | 36 | 1236608 | -6 |
| INFO | 30 | 1154869 | 3 |
| VRSN | 31 | 5137304 | 1 |
| RCI | 15 | 559786 | 2 |
| Average | 28 | 2022142 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $2022 million. That figure was $494 million in VRSK’s case. M&T Bank Corporation (NYSE:MTB) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 15 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 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 VRSK as the stock returned 5.7% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
