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.
Verint Systems Inc. (NASDAQ:VRNT) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds’ portfolios at the end of September. At the end of this article we will also compare VRNT to other stocks including Array Biopharma Inc (NASDAQ:ARRY), Avanos Medical (NYSE:AVNS), and Chegg Inc (NYSE:CHGG) to get a better sense of its popularity.
In the eyes of most shareholders, hedge funds are viewed as underperforming, old financial tools of yesteryear. While there are more than 8,000 funds trading at present, We look at the aristocrats of this club, about 700 funds. Most estimates calculate that this group of people handle bulk of all hedge funds’ total asset base, and by tailing their finest equity investments, Insider Monkey has determined various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to view the recent hedge fund action regarding Verint Systems Inc. (NASDAQ:VRNT).
How are hedge funds trading Verint Systems Inc. (NASDAQ:VRNT)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, no change from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards VRNT over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, RGM Capital was the largest shareholder of Verint Systems Inc. (NASDAQ:VRNT), with a stake worth $119.5 million reported as of the end of September. Trailing RGM Capital was Fisher Asset Management, which amassed a stake valued at $103.9 million. GLG Partners, Millennium Management, and Impax Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Verint Systems Inc. (NASDAQ:VRNT) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of hedge funds who sold off their full holdings by the end of the third quarter. It’s worth mentioning that Glenn Russell Dubin’s Highbridge Capital Management said goodbye to the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising about $7.9 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $4.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Verint Systems Inc. (NASDAQ:VRNT) but similarly valued. These stocks are Array Biopharma Inc (NASDAQ:ARRY), Avanos Medical, Inc. (NYSE:AVNS), Chegg Inc (NYSE:CHGG), and BancorpSouth Bank (NYSE:BXS). This group of stocks’ market values are closest to VRNT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARRY | 30 | 816377 | -1 |
| AVNS | 17 | 114236 | 1 |
| CHGG | 21 | 368868 | 5 |
| BXS | 7 | 101577 | 0 |
| Average | 18.75 | 350265 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $350 million. That figure was $320 million in VRNT’s case. Array Biopharma Inc (NASDAQ:ARRY) is the most popular stock in this table. On the other hand BancorpSouth Bank (NYSE:BXS) is the least popular one with only 7 bullish hedge fund positions. Verint Systems Inc. (NASDAQ:VRNT) 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 ARRY might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
