At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Veeva Systems Inc (NYSE:VEEV) makes for a good investment right now.
Is VEEV stock a buy or sell? Hedge funds were taking a pessimistic view. The number of bullish hedge fund positions were cut by 2 lately. Veeva Systems Inc (NYSE:VEEV) was in 36 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 44. Our calculations also showed that VEEV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 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 take a peek at the new hedge fund action encompassing Veeva Systems Inc (NYSE:VEEV).
Do Hedge Funds Think VEEV Is A Good Stock To Buy Now?
At the end of December, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VEEV over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Veeva Systems Inc (NYSE:VEEV), which was worth $246.1 million at the end of the fourth quarter. On the second spot was ARK Investment Management which amassed $82.4 million worth of shares. Zevenbergen Capital Investments, AQR Capital Management, and Echo Street Capital Management were 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 1623 Capital allocated the biggest weight to Veeva Systems Inc (NYSE:VEEV), around 4.52% of its 13F portfolio. Montanaro Asset Management is also relatively very bullish on the stock, setting aside 3.45 percent of its 13F equity portfolio to VEEV.
Seeing as Veeva Systems Inc (NYSE:VEEV) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedge funds that elected to cut their full holdings by the end of the fourth quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the biggest investment of the 750 funds tracked by Insider Monkey, comprising about $24.6 million in stock. Andrew Sandler’s fund, Sandler Capital Management, also dumped its stock, about $12.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the fourth quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Veeva Systems Inc (NYSE:VEEV) but similarly valued. We will take a look at Exelon Corporation (NYSE:EXC), Dow Inc. (NYSE:DOW), Carvana Co. (NYSE:CVNA), Baxter International Inc. (NYSE:BAX), CNOOC Limited (NYSE:CEO), Pinterest, Inc. (NYSE:PINS), and Thomson Reuters Corporation (NYSE:TRI). All of these stocks’ market caps resemble VEEV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXC | 30 | 729348 | 1 |
| DOW | 47 | 711306 | 5 |
| CVNA | 63 | 7071672 | 10 |
| BAX | 42 | 2801959 | -9 |
| CEO | 13 | 197301 | -1 |
| PINS | 95 | 5840185 | 15 |
| TRI | 23 | 360755 | 4 |
| Average | 44.7 | 2530361 | 3.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.7 hedge funds with bullish positions and the average amount invested in these stocks was $2530 million. That figure was $884 million in VEEV’s case. Pinterest, Inc. (NYSE:PINS) is the most popular stock in this table. On the other hand CNOOC Limited (NYSE:CEO) is the least popular one with only 13 bullish hedge fund positions. Veeva Systems Inc (NYSE:VEEV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VEEV is 41.6. 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 7.9% in 2021 through April 1st and surpassed the market again by 0.4 percentage points. Unfortunately VEEV wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); VEEV investors were disappointed as the stock returned -1.6% since the end of December (through 4/1) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
