Is VTRS Stock A Buy or Sell?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Viatris Inc. (NASDAQ:VTRS) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is VTRS stock a buy? Investors who are in the know were taking an optimistic view. The number of bullish hedge fund positions rose by 19 lately. Viatris Inc. (NASDAQ:VTRS) was in 67 hedge funds’ portfolios at the end of December. The all time high for this statistic is 74. Our calculations also showed that VTRS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.

Richard S. Pzena of Pzena Investment 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 let’s review the new hedge fund action surrounding Viatris Inc. (NASDAQ:VTRS).

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

At Q4’s end, a total of 67 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the third quarter of 2020. By comparison, 47 hedge funds held shares or bullish call options in VTRS a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

The largest stake in Viatris Inc. (NASDAQ:VTRS) was held by Laurion Capital Management, which reported holding $435.4 million worth of stock at the end of December. It was followed by Pzena Investment Management with a $320.2 million position. Other investors bullish on the company included Deerfield Management, Camber Capital Management, and Slate Path Capital. In terms of the portfolio weights assigned to each position Slate Path Capital allocated the biggest weight to Viatris Inc. (NASDAQ:VTRS), around 12% of its 13F portfolio. Courage Capital is also relatively very bullish on the stock, dishing out 10.74 percent of its 13F equity portfolio to VTRS.

As industrywide interest jumped, some big names have been driving this bullishness. Laurion Capital Management, managed by Benjamin A. Smith, initiated the largest position in Viatris Inc. (NASDAQ:VTRS). Laurion Capital Management had $435.4 million invested in the company at the end of the quarter. Richard S. Pzena’s Pzena Investment Management also initiated a $320.2 million position during the quarter. The other funds with new positions in the stock are James E. Flynn’s Deerfield Management, Stephen DuBois’s Camber Capital Management, and David Greenspan’s Slate Path Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Viatris Inc. (NASDAQ:VTRS) but similarly valued. We will take a look at MPLX LP (NYSE:MPLX), Deutsche Bank Aktiengesellschaft (NYSE:DB), Wayfair Inc (NYSE:W), Etsy Inc (NASDAQ:ETSY), AvalonBay Communities Inc (NYSE:AVB), China Telecom Corporation Limited (NYSE:CHA), and Enphase Energy Inc (NASDAQ:ENPH). This group of stocks’ market values match VTRS’s market value.

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As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $1210 million. That figure was $2754 million in VTRS’s case. Etsy Inc (NASDAQ:ETSY) is the most popular stock in this table. On the other hand China Telecom Corporation Limited (NYSE:CHA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Viatris Inc. (NASDAQ:VTRS) is more popular among hedge funds. Our overall hedge fund sentiment score for VTRS is 87.2. 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 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately VTRS wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on VTRS were disappointed as the stock returned -29.3% since the end of the fourth quarter (through 4/19) 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 since 2019.

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