Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 9 percentage points since the end of the third quarter of 2018 as investors worried over the possible ramifications of rising interest rates and escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Venator Materials PLC (NYSE:VNTR) and see how the stock is affected by the recent hedge fund activity.
Venator Materials PLC (NYSE:VNTR) has experienced an increase in hedge fund sentiment of late. Our calculations also showed that VNTR isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most investors, hedge funds are viewed as unimportant, outdated investment vehicles of the past. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the leaders of this club, around 750 funds. These investment experts preside over bulk of the hedge fund industry’s total capital, and by shadowing their unrivaled picks, Insider Monkey has unearthed a few investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
Let’s check out the key hedge fund action encompassing Venator Materials PLC (NYSE:VNTR).
How are hedge funds trading Venator Materials PLC (NYSE:VNTR)?
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in VNTR over the last 15 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Point72 Asset Management held the most valuable stake in Venator Materials PLC (NYSE:VNTR), which was worth $45.6 million at the end of the first quarter. On the second spot was Adage Capital Management which amassed $36.7 million worth of shares. Moreover, Scopus Asset Management, Point72 Asset Management, and Two Sigma Advisors were also bullish on Venator Materials PLC (NYSE:VNTR), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Scopus Asset Management, managed by Alexander Mitchell, created the most outsized position in Venator Materials PLC (NYSE:VNTR). Scopus Asset Management had $6.7 million invested in the company at the end of the quarter. Vince Maddi and Shawn Brennan’s SIR Capital Management also made a $2 million investment in the stock during the quarter. The other funds with brand new VNTR positions are Bradley Louis Radoff’s Fondren Management, David Harding’s Winton Capital Management, and Minhua Zhang’s Weld Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Venator Materials PLC (NYSE:VNTR) but similarly valued. These stocks are Tristate Capital Holdings Inc (NASDAQ:TSC), ProQR Therapeutics NV (NASDAQ:PRQR), Vivint Solar Inc (NYSE:VSLR), and Unisys Corporation (NYSE:UIS). This group of stocks’ market valuations match VNTR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSC | 13 | 53936 | -1 |
| PRQR | 10 | 106417 | -1 |
| VSLR | 11 | 23343 | -5 |
| UIS | 19 | 77897 | 2 |
| Average | 13.25 | 65398 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $108 million in VNTR’s case. Unisys Corporation (NYSE:UIS) is the most popular stock in this table. On the other hand ProQR Therapeutics NV (NASDAQ:PRQR) is the least popular one with only 10 bullish hedge fund positions. Venator Materials PLC (NYSE:VNTR) 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 VNTR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VNTR were disappointed as the stock returned -20.8% 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.
