In this article we will check out the progression of hedge fund sentiment towards Verb Technology Company, Inc. (NASDAQ:VERB) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Verb Technology Company, Inc. (NASDAQ:VERB) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of March. At the end of this article we will also compare VERB to other stocks including Superior Industries International Inc. (NYSE:SUP), Tantech Holdings Ltd. (NASDAQ:TANH), and Mohawk Group Holdings, Inc. (NASDAQ:MWK) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Sander Gerber of Hudson Bay Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the key hedge fund action encompassing Verb Technology Company, Inc. (NASDAQ:VERB).
What does smart money think about Verb Technology Company, Inc. (NASDAQ:VERB)?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VERB over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Verb Technology Company, Inc. (NASDAQ:VERB), which was worth $0.1 million at the end of the third quarter. On the second spot was Hudson Bay Capital Management which amassed $0 million worth of shares. Ionic Capital Management was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ionic Capital Management allocated the biggest weight to Verb Technology Company, Inc. (NASDAQ:VERB), around 0.01% of its 13F portfolio. Hudson Bay Capital Management is also relatively very bullish on the stock, earmarking 0.0008 percent of its 13F equity portfolio to VERB.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Verb Technology Company, Inc. (NASDAQ:VERB) but similarly valued. We will take a look at Superior Industries International Inc. (NYSE:SUP), Tantech Holdings Ltd. (NASDAQ:TANH), Mohawk Group Holdings, Inc. (NASDAQ:MWK), and Kopin Corporation (NASDAQ:KOPN). All of these stocks’ market caps are closest to VERB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SUP | 12 | 4878 | -2 |
| TANH | 2 | 548 | 0 |
| MWK | 2 | 1386 | 0 |
| KOPN | 4 | 915 | 0 |
| Average | 5 | 1932 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $0 million in VERB’s case. Superior Industries International Inc. (NYSE:SUP) is the most popular stock in this table. On the other hand Tantech Holdings Ltd. (NASDAQ:TANH) is the least popular one with only 2 bullish hedge fund positions. Verb Technology Company, Inc. (NASDAQ:VERB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately VERB wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); VERB investors were disappointed as the stock returned -8.3% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.
