Veeva Systems Inc (VEEV)’s Stock Trading Higher on Better-Than-Expected Q1 Results

Veeva Systems Inc (NYSE:VEEV) has surged by more than 10% so far today after the company reported EPS of $0.15 on sales of $119.8 million for its first quarter, beating the consensus by $0.04 and $4.28 million, respectively. Revenue soared 33.2% year-over-year, led by subscription services sales, which jumped 39.4% year-over-year to $96 million. Professional services also advanced by 12.9% year-over-year. Guidance is strong, with management expecting full-year revenue of $516 to $520 million and EPS of $0.55 to $0.57, versus the consensus of $512.2 million and $0.55 per share, respectively.

Is Veeva Systems Inc (NYSE:VEEV) a buy, sell, or hold? The best stock pickers are selling. The number of long hedge fund positions dropped by three recently. At the end of this article we will also compare VEEV to other stocks including Cedar Fair, L.P. (NYSE:FUN), Fair Isaac Corporation (NYSE:FICO), and Transocean LTD (NYSE:RIG) to get a better sense of its popularity.

To most investors, hedge funds are viewed as slow, old financial tools of yesteryear. While there are greater than 8000 funds trading at present, Our researchers hone in on the top tier of this group, about 700 funds. These hedge fund managers have their hands on the lion’s share of the hedge fund industry’s total capital, and by watching their top investments, Insider Monkey has spotted numerous investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, we’re going to take a look at the recent action surrounding Veeva Systems Inc (NYSE:VEEV).

At Q1’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 19% from the fourth quarter of 2015. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Dorsal Capital Management, managed by Ryan Frick and Oliver Evans, holds the biggest position in Veeva Systems Inc (NYSE:VEEV). Dorsal Capital Management has a $50.1 million position in the stock, comprising 4.8% of its 13F portfolio. On Dorsal Capital Management’s heels is Christopher Lyle of SCGE Management, with a $30 million position; the fund has 5% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish encompass Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners.

Due to the fact that Veeva Systems Inc (NYSE:VEEV) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers that elected to cut their positions entirely in the fourth quarter. It’s worth mentioning that Michael Platt and William Reeves’s BlueCrest Capital Mgmt. said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, worth about $8.8 million in stock, and Solomon Kumin’s Folger Hill Asset Management was right behind this move, as the fund dropped about $5 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds in the fourth quarter.

Let’s also examine hedge fund activity in other stocks similar to Veeva Systems Inc (NYSE:VEEV). These stocks are Cedar Fair, L.P. (NYSE:FUN), Fair Isaac Corporation (NYSE:FICO), Transocean LTD (NYSE:RIG), and Catalent Inc (NYSE:CTLT). This group of stocks’ market values resemble VEEV’s market value.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $309 million. That figure was $144 million in VEEV’s case. Transocean LTD (NYSE:RIG) is the most popular stock in this table. On the other hand Cedar Fair, L.P. (NYSE:FUN) is the least popular one with only 6 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 RIG might be a better candidate to consider a long position.

Disclosure: None