In this article we will take a look at whether hedge funds think Veracyte Inc (NASDAQ:VCYT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Veracyte Inc (NASDAQ:VCYT) a good stock to buy? The best stock pickers were cutting their exposure. The number of bullish hedge fund bets went down by 1 recently. Veracyte Inc (NASDAQ:VCYT) was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that VCYT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 22 hedge funds in our database with VCYT holdings at the end of June.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to view the recent hedge fund action regarding Veracyte Inc (NASDAQ:VCYT).
Charles Clough of Clough Capital Partners
Do Hedge Funds Think VCYT Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VCYT over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, ARK Investment Management was the largest shareholder of Veracyte Inc (NASDAQ:VCYT), with a stake worth $324.2 million reported as of the end of September. Trailing ARK Investment Management was Fisher Asset Management, which amassed a stake valued at $44.5 million. Citadel Investment Group, Clough Capital Partners, and Balyasny Asset 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 SilverArc Capital allocated the biggest weight to Veracyte Inc (NASDAQ:VCYT), around 4.72% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, dishing out 1.78 percent of its 13F equity portfolio to VCYT.
Since Veracyte Inc (NASDAQ:VCYT) has witnessed falling interest from the aggregate hedge fund industry, we can see that there were a few money managers who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Renaissance Technologies dumped the largest investment of all the hedgies watched by Insider Monkey, comprising about $9.9 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $8.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Veracyte Inc (NASDAQ:VCYT). These stocks are Steven Madden, Ltd. (NASDAQ:SHOO), Evertec Inc (NYSE:EVTC), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), Turning Point Therapeutics, Inc. (NASDAQ:TPTX), Associated Banc Corp (NYSE:ASB), SITE Centers Corp. (NYSE:SITC), and Clover Health Investments, Corp. (NASDAQ:CLOV). This group of stocks’ market values are similar to VCYT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHOO | 23 | 195874 | 5 |
| EVTC | 17 | 189912 | -3 |
| CBRL | 21 | 107435 | -7 |
| TPTX | 21 | 449761 | -7 |
| ASB | 19 | 183680 | 1 |
| SITC | 16 | 72678 | -2 |
| CLOV | 12 | 396288 | -11 |
| Average | 18.4 | 227947 | -3.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $228 million. That figure was $456 million in VCYT’s case. Steven Madden, Ltd. (NASDAQ:SHOO) is the most popular stock in this table. On the other hand Clover Health Investments, Corp. (NASDAQ:CLOV) is the least popular one with only 12 bullish hedge fund positions. Veracyte Inc (NASDAQ:VCYT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VCYT is 71.2. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately VCYT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VCYT were disappointed as the stock returned -11.3% since the end of September (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
