It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Verso Corporation (NYSE:VRS).
Is Verso Corporation (NYSE:VRS) a worthy investment now? Investors who are in the know are genuinely betting on the stock. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings increased by 17 in recent months. There were no hedge funds in our database with VRS holdings at the end of the second quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP), Daqo New Energy Corp (NYSE:DQ), and New Home Company Inc (NYSE:NWHM) to gather more data points.
Follow Verso Corp (NYSE:VRS)
Follow Verso Corp (NYSE:VRS)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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How are hedge funds trading Verso Corporation (NYSE:VRS)?
As stated earlier, at the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Howard Marks’s Oaktree Capital Management has the biggest position in Verso Corporation (NYSE:VRS), worth close to $20 million. Sitting at the No. 2 spot is Centerbridge Partners, led by Mark T. Gallogly, holding a $13 million position; 1.1% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions contain Jonathan Kolatch’s Redwood Capital Management, Robert Henry Lynch’s Aristeia Capital and Clint Carlson’s Carlson Capital. We should note that Aristeia Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Verso Corporation (NYSE:VRS) but similarly valued. We will take a look at Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP), Daqo New Energy Corp (NYSE:DQ), New Home Company Inc (NYSE:NWHM), and Great Panther Silver Ltd (USA) (NYSEAMEX:GPL). All of these stocks’ market caps resemble VRS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADAP | 12 | 33285 | -2 |
| DQ | 6 | 27543 | 2 |
| NWHM | 5 | 27999 | 0 |
| GPL | 7 | 4377 | 7 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $68 million in VRS’s case. Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP) is the most popular stock in this table. On the other hand New Home Company Inc (NYSE:NWHM) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Verso Corporation (NYSE:VRS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
