Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter. Trends reversed 180 degrees during the first quarter amid Powell’s pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the first quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Viavi Solutions Inc (NASDAQ:VIAV).
Is Viavi Solutions Inc (NASDAQ:VIAV) a safe stock to buy now? The best stock pickers are taking an optimistic view. The number of bullish hedge fund bets advanced by 2 recently. Our calculations also showed that VIAV isn’t among the 30 most popular stocks among hedge funds.
In the 21st century investor’s toolkit there are a multitude of methods market participants have at their disposal to appraise their stock investments. A duo of the most innovative methods are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outclass their index-focused peers by a healthy margin (see the details here).
Noam Gottesman, GLG Partners
Let’s analyze the latest hedge fund action encompassing Viavi Solutions Inc (NASDAQ:VIAV).
What does the smart money think about Viavi Solutions Inc (NASDAQ:VIAV)?
At Q1’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in VIAV a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Viavi Solutions Inc (NASDAQ:VIAV), which was worth $88.5 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $39.8 million worth of shares. Moreover, Millennium Management, Columbus Circle Investors, and D E Shaw were also bullish on Viavi Solutions Inc (NASDAQ:VIAV), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Columbus Circle Investors, managed by Principal Global Investors, established the most outsized position in Viavi Solutions Inc (NASDAQ:VIAV). Columbus Circle Investors had $12 million invested in the company at the end of the quarter. C. Jonathan Gattman’s Cloverdale Capital Management also made a $10.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Bart Baum’s Ionic Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Viavi Solutions Inc (NASDAQ:VIAV) but similarly valued. We will take a look at B2Gold Corp (NYSE:BTG), Stitch Fix, Inc. (NASDAQ:SFIX), Delek US Holdings, Inc. (NYSE:DK), and MakeMyTrip Limited (NASDAQ:MMYT). This group of stocks’ market caps are similar to VIAV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BTG | 16 | 122491 | -1 |
| SFIX | 27 | 173160 | 7 |
| DK | 28 | 144251 | 1 |
| MMYT | 12 | 70388 | 1 |
| Average | 20.75 | 127573 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $239 million in VIAV’s case. Delek US Holdings, Inc. (NYSE:DK) is the most popular stock in this table. On the other hand MakeMyTrip Limited (NASDAQ:MMYT) is the least popular one with only 12 bullish hedge fund positions. Viavi Solutions Inc (NASDAQ:VIAV) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately VIAV wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VIAV were disappointed as the stock returned -1.5% 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 so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
