Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 20 stock picks easily bested the broader market, at 37.4% compared to 27.5%, despite there being a few duds in there like Berkshire Hathaway (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is Viad Corp (NYSE:VVI) a bargain? The smart money is taking a pessimistic view. The number of bullish hedge fund bets went down by 1 in recent months. Our calculations also showed that VVI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are seen as underperforming, old investment tools of years past. While there are over 8000 funds in operation at the moment, Our researchers hone in on the elite of this group, about 750 funds. It is estimated that this group of investors manage bulk of the hedge fund industry’s total capital, and by tailing their highest performing stock picks, Insider Monkey has deciphered a few investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the new hedge fund action regarding Viad Corp (NYSE:VVI).
How have hedgies been trading Viad Corp (NYSE:VVI)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in VVI a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Moab Capital Partners was the largest shareholder of Viad Corp (NYSE:VVI), with a stake worth $37.3 million reported as of the end of September. Trailing Moab Capital Partners was GMT Capital, which amassed a stake valued at $33.3 million. Arrowstreet Capital, Manatuck Hill Partners, and Renaissance Technologies 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 Moab Capital Partners allocated the biggest weight to Viad Corp (NYSE:VVI), around 14.19% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, setting aside 4.46 percent of its 13F equity portfolio to VVI.
Seeing as Viad Corp (NYSE:VVI) has faced bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of fund managers that decided to sell off their full holdings heading into Q4. Intriguingly, Benjamin A. Smith’s Laurion Capital Management dropped the largest investment of the “upper crust” of funds monitored by Insider Monkey, worth close to $0.6 million in stock. Minhua Zhang’s fund, Weld Capital Management, also dropped its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Viad Corp (NYSE:VVI) but similarly valued. We will take a look at CNX Resources Corporation (NYSE:CNX), Bed Bath & Beyond Inc. (NASDAQ:BBBY), Actuant Corporation (NYSE:ATU), and Sonic Automotive Inc (NYSE:SAH). All of these stocks’ market caps are closest to VVI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNX | 20 | 527661 | -1 |
| BBBY | 23 | 161773 | 3 |
| ATU | 10 | 257177 | -2 |
| SAH | 12 | 39925 | 1 |
| Average | 16.25 | 246634 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $247 million. That figure was $110 million in VVI’s case. Bed Bath & Beyond Inc. (NASDAQ:BBBY) is the most popular stock in this table. On the other hand Actuant Corporation (NYSE:ATU) is the least popular one with only 10 bullish hedge fund positions. Viad Corp (NYSE:VVI) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately VVI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); VVI investors were disappointed as the stock returned -6.3% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
