Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Veeva Systems Inc (NYSE:VEEV) investors should pay attention to an increase in support from the world’s most elite money managers recently. Our calculations also showed that VEEV 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.
We’re going to analyze the key hedge fund action surrounding Veeva Systems Inc (NYSE:VEEV).
What have hedge funds been doing with Veeva Systems Inc (NYSE:VEEV)?
At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in VEEV heading into this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’s Renaissance Technologies has the biggest position in Veeva Systems Inc (NYSE:VEEV), worth close to $155.9 million, amounting to 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is John Overdeck and David Siegel of Two Sigma Advisors, with a $72.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism contain David Goel and Paul Ferri’s Matrix Capital Management, Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management.
As aggregate interest increased, key money managers were leading the bulls’ herd. Echo Street Capital Management, managed by Greg Poole, initiated the biggest position in Veeva Systems Inc (NYSE:VEEV). Echo Street Capital Management had $12.6 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $8.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Ben Gambill’s Tiger Eye Capital, Dmitry Balyasny’s Balyasny Asset Management, and Guy Shahar’s DSAM Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Veeva Systems Inc (NYSE:VEEV) but similarly valued. We will take a look at Equifax Inc. (NYSE:EFX), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Maxim Integrated Products Inc. (NASDAQ:MXIM), and Host Hotels and Resorts Inc (NYSE:HST). This group of stocks’ market values match VEEV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EFX | 35 | 2075715 | 0 |
| TTWO | 58 | 2336400 | 2 |
| MXIM | 30 | 579428 | 5 |
| HST | 21 | 383143 | 0 |
| Average | 36 | 1343672 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1.34 billion. That figure was $559 million in VEEV’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Host Hotels and Resorts Inc (NYSE:HST) is the least popular one with only 21 bullish hedge fund positions. Veeva Systems Inc (NYSE:VEEV) 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 TTWO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
