Is VC Stock A Buy or Sell?

In this article we will check out the progression of hedge fund sentiment towards Visteon Corp (NASDAQ:VC) 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.

Is VC stock a buy? The best stock pickers were selling. The number of long hedge fund positions fell by 5 lately. Visteon Corp (NASDAQ:VC) was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 56. Our calculations also showed that VC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 28 hedge funds in our database with VC holdings at the end of September.

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Philip Hempleman of Ardsley Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to go over the key hedge fund action regarding Visteon Corp (NASDAQ:VC).

Do Hedge Funds Think VC Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in VC a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

The largest stake in Visteon Corp (NASDAQ:VC) was held by Iridian Asset Management, which reported holding $79.8 million worth of stock at the end of December. It was followed by Columbus Circle Investors with a $52.1 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and Private Capital Management. In terms of the portfolio weights assigned to each position Albar Capital allocated the biggest weight to Visteon Corp (NASDAQ:VC), around 6.1% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, dishing out 3.5 percent of its 13F equity portfolio to VC.

Judging by the fact that Visteon Corp (NASDAQ:VC) has faced bearish sentiment from the smart money, it’s safe to say that there lies a certain “tier” of money managers that slashed their entire stakes heading into Q1. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP cut the largest position of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $15.7 million in stock. Brian Sheehy’s fund, Iszo Capital, also dumped its stock, about $14.2 million worth. These transactions are important to note, as total hedge fund interest dropped by 5 funds heading into Q1.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Visteon Corp (NASDAQ:VC) but similarly valued. These stocks are Macy’s, Inc. (NYSE:M), Jamf Holding Corp. (NASDAQ:JAMF), Norbord Inc. (NYSE:OSB), AAON, Inc. (NASDAQ:AAON), Equitrans Midstream Corporation (NYSE:ETRN), International Game Technology PLC (NYSE:IGT), and Avnet, Inc. (NASDAQ:AVT). This group of stocks’ market values resemble VC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $693 million. That figure was $286 million in VC’s case. Macy’s, Inc. (NYSE:M) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 13 bullish hedge fund positions. Visteon Corp (NASDAQ:VC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VC is 36.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and surpassed the market again by 0.9 percentage points. Unfortunately VC wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); VC investors were disappointed as the stock returned -6.5% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 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.