We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards VirTra, Inc. (NASDAQ:VTSI).
Is VTSI stock a buy? Money managers were betting on the stock. The number of long hedge fund positions improved by 3 in recent months. VirTra, Inc. (NASDAQ:VTSI) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that VTSI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 1 hedge funds in our database with VTSI positions at the end of the fourth quarter.
In today’s marketplace there are a lot of formulas shareholders use to assess stocks. Some of the less utilized formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best fund managers can outperform the S&P 500 by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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 homepage. With all of this in mind let’s take a look at the fresh hedge fund action regarding VirTra, Inc. (NASDAQ:VTSI).
Do Hedge Funds Think VTSI Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 300% from one quarter earlier. On the other hand, there were a total of 1 hedge funds with a bullish position in VTSI a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Hudson Bay Capital Management, managed by Sander Gerber, holds the most valuable position in VirTra, Inc. (NASDAQ:VTSI). Hudson Bay Capital Management has a $3.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Hal Mintz of Sabby Capital, with a $3.5 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish contain Renaissance Technologies, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to VirTra, Inc. (NASDAQ:VTSI), around 0.67% of its 13F portfolio. Hudson Bay Capital Management is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to VTSI.
As industrywide interest jumped, some big names have been driving this bullishness. Hudson Bay Capital Management, managed by Sander Gerber, established the most valuable position in VirTra, Inc. (NASDAQ:VTSI). Hudson Bay Capital Management had $3.9 million invested in the company at the end of the quarter. Hal Mintz’s Sabby Capital also made a $3.5 million investment in the stock during the quarter. The only other fund with a brand new VTSI position is Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as VirTra, Inc. (NASDAQ:VTSI) but similarly valued. These stocks are Ballantyne Strong Inc (NYSE:BTN), Mid-Southern Bancorp, Inc. (NASDAQ:MSVB), ShiftPixy, Inc. (NASDAQ:PIXY), Virios Therapeutics, Inc. (NASDAQ:VIRI), NLS Pharmaceutics AG (NASDAQ:NLSP), Tremont Mortgage Trust (NASDAQ:TRMT), and Broadway Financial Corporation (NASDAQ:BYFC). This group of stocks’ market valuations are similar to VTSI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BTN | 4 | 4046 | 2 |
| MSVB | 3 | 3599 | -1 |
| PIXY | 4 | 583 | 2 |
| VIRI | 3 | 3782 | 1 |
| NLSP | 3 | 799 | 3 |
| TRMT | 3 | 1284 | 1 |
| BYFC | 3 | 1142 | -1 |
| Average | 3.3 | 2176 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.3 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $8 million in VTSI’s case. Ballantyne Strong Inc (NYSE:BTN) is the most popular stock in this table. On the other hand Mid-Southern Bancorp, Inc. (NASDAQ:MSVB) is the least popular one with only 3 bullish hedge fund positions. VirTra, Inc. (NASDAQ:VTSI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VTSI is 88. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately VTSI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VTSI were disappointed as the stock returned 3.4% since the end of March (through 6/11) 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.
Disclosure: None. This article was originally published at Insider Monkey.