Is VRSK Stock A Buy or Sell?

In this article we are going to use hedge fund sentiment as a tool and determine whether Verisk Analytics, Inc. (NASDAQ:VRSK) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is VRSK stock a buy?Verisk Analytics, Inc. (NASDAQ:VRSK) investors should be aware of a decrease in hedge fund sentiment of late. Verisk Analytics, Inc. (NASDAQ:VRSK) was in 32 hedge funds’ portfolios at the end of December. The all time high for this statistic is 40. There were 40 hedge funds in our database with VRSK positions at the end of the third quarter. Our calculations also showed that VRSK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Charles Akre of Akre Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 we’re going to take a look at the new hedge fund action surrounding Verisk Analytics, Inc. (NASDAQ:VRSK).

Do Hedge Funds Think VRSK Is A Good Stock To Buy Now?

At Q4’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VRSK over the last 22 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.

More specifically, Akre Capital Management was the largest shareholder of Verisk Analytics, Inc. (NASDAQ:VRSK), with a stake worth $508.7 million reported as of the end of December. Trailing Akre Capital Management was Impax Asset Management, which amassed a stake valued at $227.2 million. Ako Capital, Echo Street Capital Management, and Fundsmith LLP 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 Akre Capital Management allocated the biggest weight to Verisk Analytics, Inc. (NASDAQ:VRSK), around 3.44% of its 13F portfolio. Ako Capital is also relatively very bullish on the stock, dishing out 2.67 percent of its 13F equity portfolio to VRSK.

Due to the fact that Verisk Analytics, Inc. (NASDAQ:VRSK) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few fund managers that elected to cut their positions entirely by the end of the fourth quarter. At the top of the heap, D. E. Shaw’s D E Shaw dropped the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $21.4 million in stock. Renaissance Technologies, also dumped its stock, about $13.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 8 funds by the end of the fourth quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Verisk Analytics, Inc. (NASDAQ:VRSK) but similarly valued. We will take a look at Johnson Controls International plc (NYSE:JCI), TransDigm Group Incorporated (NYSE:TDG), Cummins Inc. (NYSE:CMI), Paychex, Inc. (NASDAQ:PAYX), STMicroelectronics N.V. (NYSE:STM), CRH PLC (NYSE:CRH), and The Allstate Corporation (NYSE:ALL). This group of stocks’ market valuations resemble VRSK’s market valuation.

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As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $1501 million. That figure was $1438 million in VRSK’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand CRH PLC (NYSE:CRH) is the least popular one with only 7 bullish hedge fund positions. Verisk Analytics, Inc. (NASDAQ:VRSK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VRSK is 42.9. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and surpassed the market again by 1.5 percentage points. Unfortunately VRSK wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); VRSK investors were disappointed as the stock returned -11.9% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.

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