Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Veritone, Inc. (NASDAQ:VERI) in this article.
Is Veritone, Inc. (NASDAQ:VERI) a cheap stock to buy now? Hedge funds were taking a bullish view. The number of bullish hedge fund bets rose by 2 in recent months. Veritone, Inc. (NASDAQ:VERI) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that VERI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 5 hedge funds in our database with VERI holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Keeping this in mind let’s review the recent hedge fund action regarding Veritone, Inc. (NASDAQ:VERI).
Hedge fund activity in Veritone, Inc. (NASDAQ:VERI)
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in VERI a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Veritone, Inc. (NASDAQ:VERI) was held by D E Shaw, which reported holding $5.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $3.1 million position. Other investors bullish on the company included Two Sigma Advisors, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Two Sigma Advisors allocated the biggest weight to Veritone, Inc. (NASDAQ:VERI), around 0.01% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to VERI.
As industrywide interest jumped, specific money managers have jumped into Veritone, Inc. (NASDAQ:VERI) headfirst. Renaissance Technologies, founded by Jim Simons, established the most valuable position in Veritone, Inc. (NASDAQ:VERI). Renaissance Technologies had $3.1 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $3 million position during the quarter. The following funds were also among the new VERI investors: Cliff Asness’s AQR Capital Management, Greg Eisner’s Engineers Gate Manager, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Veritone, Inc. (NASDAQ:VERI) but similarly valued. We will take a look at Trilogy Metals Inc. (NYSE:TMQ), CalAmp Corp. (NASDAQ:CAMP), Hanmi Financial Corp (NASDAQ:HAFC), CNB Financial Corporation (NASDAQ:CCNE), Aspen Group Inc. (NASDAQ:ASPU), AXT Inc (NASDAQ:AXTI), and Northern Oil & Gas, Inc. (NYSE:NOG). This group of stocks’ market values are similar to VERI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TMQ | 9 | 55612 | 2 |
| CAMP | 11 | 190360 | -2 |
| HAFC | 12 | 14090 | 0 |
| CCNE | 8 | 10648 | 2 |
| ASPU | 9 | 33426 | -1 |
| AXTI | 8 | 15855 | -4 |
| NOG | 12 | 29194 | -10 |
| Average | 9.9 | 49884 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $13 million in VERI’s case. Hanmi Financial Corp (NASDAQ:HAFC) is the most popular stock in this table. On the other hand CNB Financial Corporation (NASDAQ:CCNE) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Veritone, Inc. (NASDAQ:VERI) is even less popular than CCNE. Our overall hedge fund sentiment score for VERI is 37. 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. Hedge funds clearly dropped the ball on VERI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on VERI as the stock returned 165.4% since Q3 (through December 2nd) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
