Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Viad Corp (NYSE:VVI) from the perspective of those elite funds.
Is Viad Corp (NYSE:VVI) a buy here? Money managers are taking an optimistic view. The number of bullish hedge fund positions moved up by 3 in recent months. Our calculations also showed that VVI isn’t among the 30 most popular stocks among hedge funds (see the video below). VVI was in 16 hedge funds’ portfolios at the end of the second quarter of 2019. There were 13 hedge funds in our database with VVI holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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 check out the key hedge fund action surrounding Viad Corp (NYSE:VVI).
How have hedgies been trading Viad Corp (NYSE:VVI)?
At Q2’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards VVI over the last 16 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Michael M. Rothenberg’s Moab Capital Partners has the biggest position in Viad Corp (NYSE:VVI), worth close to $51.1 million, amounting to 16.6% of its total 13F portfolio. Coming in second is GMT Capital, led by Thomas E. Claugus, holding a $37.9 million position; 1.3% of its 13F portfolio is allocated to the company. Other peers that are bullish comprise Mark Broach’s Manatuck Hill Partners, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Martin Whitman’s Third Avenue Management.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Viad Corp (NYSE:VVI). Arrowstreet Capital had $6.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.6 million investment in the stock during the quarter. The following funds were also among the new VVI investors: Benjamin A. Smith’s Laurion Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Viad Corp (NYSE:VVI) but similarly valued. We will take a look at Alector, Inc. (NASDAQ:ALEC), Materion Corp (NYSE:MTRN), Talos Energy, Inc. (NYSE:TALO), and CNX Resources Corporation (NYSE:CNX). All of these stocks’ market caps are closest to VVI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALEC | 13 | 347529 | 1 |
| MTRN | 15 | 112610 | -2 |
| TALO | 14 | 66272 | -3 |
| CNX | 21 | 500604 | 0 |
| Average | 15.75 | 256754 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $257 million. That figure was $120 million in VVI’s case. CNX Resources Corporation (NYSE:CNX) is the most popular stock in this table. On the other hand Alector, Inc. (NASDAQ:ALEC) is the least popular one with only 13 bullish hedge fund positions. Viad Corp (NYSE:VVI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately VVI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VVI were disappointed as the stock returned 1.5% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
