The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Vertex, Inc. (NASDAQ:VERX).
Is VERX a good stock to buy now? Hedge funds were taking a bullish view. The number of bullish hedge fund bets advanced by 15 lately. Vertex, Inc. (NASDAQ:VERX) was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that VERX 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).
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.
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. With all of this in mind let’s check out the recent hedge fund action regarding Vertex, Inc. (NASDAQ:VERX).
Do Hedge Funds Think VERX Is A Good Stock To Buy Now?
At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in VERX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Viking Global, managed by Andreas Halvorsen, holds the number one position in Vertex, Inc. (NASDAQ:VERX). Viking Global has a $46.7 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Tensile Capital, managed by Douglas Dossey and Arthur Young, which holds a $23.7 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Chase Coleman’s Tiger Global Management LLC, Ken Griffin’s Citadel Investment Group and Paul Tudor Jones’s Tudor Investment Corp. In terms of the portfolio weights assigned to each position Tensile Capital allocated the biggest weight to Vertex, Inc. (NASDAQ:VERX), around 3.18% of its 13F portfolio. Broad Bay Capital is also relatively very bullish on the stock, designating 0.2 percent of its 13F equity portfolio to VERX.
As one would reasonably expect, key money managers were breaking ground themselves. Viking Global, managed by Andreas Halvorsen, created the biggest position in Vertex, Inc. (NASDAQ:VERX). Viking Global had $46.7 million invested in the company at the end of the quarter. Douglas Dossey and Arthur Young’s Tensile Capital also initiated a $23.7 million position during the quarter. The following funds were also among the new VERX investors: Chase Coleman’s Tiger Global Management LLC, Ken Griffin’s Citadel Investment Group, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now take a look at hedge fund activity in other stocks similar to Vertex, Inc. (NASDAQ:VERX). These stocks are Watts Water Technologies Inc (NYSE:WTS), Cloudera, Inc. (NYSE:CLDR), PS Business Parks Inc (NYSE:PSB), Hudson Pacific Properties Inc (NYSE:HPP), Black Hills Corporation (NYSE:BKH), Inari Medical, Inc. (NASDAQ:NARI), and Air Lease Corp (NYSE:AL). This group of stocks’ market caps resemble VERX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WTS | 18 | 277904 | -7 |
| CLDR | 31 | 768674 | -2 |
| PSB | 17 | 83110 | -3 |
| HPP | 17 | 311969 | -7 |
| BKH | 22 | 128780 | 0 |
| NARI | 14 | 105958 | -5 |
| AL | 20 | 608764 | -2 |
| Average | 19.9 | 326451 | -3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $326 million. That figure was $97 million in VERX’s case. Cloudera, Inc. (NYSE:CLDR) is the most popular stock in this table. On the other hand Inari Medical, Inc. (NASDAQ:NARI) is the least popular one with only 14 bullish hedge fund positions. Vertex, Inc. (NASDAQ:VERX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VERX is 14.7. 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. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on VERX as the stock returned 23.6% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.