Before we spend many hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Virtu Financial Inc (NASDAQ:VIRT).
Virtu Financial Inc (NASDAQ:VIRT) has seen a decrease in hedge fund interest of late. VIRT was in 14 hedge funds’ portfolios at the end of September. There were 20 hedge funds in our database with VIRT positions at the end of the previous quarter. Our calculations also showed that VIRT isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a glance at the recent hedge fund action surrounding Virtu Financial Inc (NASDAQ:VIRT).
How are hedge funds trading Virtu Financial Inc (NASDAQ:VIRT)?
Heading into the fourth quarter of 2018, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VIRT over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Virtu Financial Inc (NASDAQ:VIRT), which was worth $32.1 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $17.4 million worth of shares. Moreover, Highbridge Capital Management, Point72 Asset Management, and Citadel Investment Group were also bullish on Virtu Financial Inc (NASDAQ:VIRT), allocating a large percentage of their portfolios to this stock.
Because Virtu Financial Inc (NASDAQ:VIRT) has witnessed falling interest from the smart money, it’s easy to see that there was a specific group of money managers that decided to sell off their full holdings by the end of the third quarter. Interestingly, Jacob Doft’s Highline Capital Management sold off the biggest investment of all the hedgies tracked by Insider Monkey, valued at about $51.8 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $8 million worth. These moves are important to note, as total hedge fund interest was cut by 6 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Virtu Financial Inc (NASDAQ:VIRT). We will take a look at Hawaiian Electric Industries, Inc. (NYSE:HE), MB Financial, Inc. (NASDAQ:MBFI), Ryder System, Inc. (NYSE:R), and Southwest Gas Corporation (NYSE:SWX). All of these stocks’ market caps resemble VIRT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HE | 11 | 117755 | 1 |
| MBFI | 13 | 237887 | -3 |
| R | 23 | 383351 | 6 |
| SWX | 13 | 177582 | 0 |
| Average | 15 | 229144 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $229 million. That figure was $73 million in VIRT’s case. Ryder System, Inc. (NYSE:R) is the most popular stock in this table. On the other hand Hawaiian Electric Industries, Inc. (NYSE:HE) is the least popular one with only 11 bullish hedge fund positions. Virtu Financial Inc (NASDAQ:VIRT) 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. In this regard R might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
