Verisign, Inc. (VRSN) Hedge Funds Are Snapping Up

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 5.2% in the 12 months ending October 30, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of September 2014) generated a return of 9.5% during the same 12-month period, with 63% of these stock picks outperformed the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 16-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Verisign, Inc. (NASDAQ:VRSN).

Verisign, Inc. (NASDAQ:VRSN) investors should pay attention to an increase in support from the world’s most elite money managers of late. Verisign, Inc. (NASDAQ:VRSN) was in 27 hedge funds’ portfolios at the end of the third quarter of 2015. There were 26 hedge funds in our database with Verisign, Inc. (NASDAQ:VRSN)  holdings at the end of the previous quarter. At the end of this article, we will also compare Verisign, Inc. (NASDAQ:VRSN) to other stocks, including SEI Investments Company (NASDAQ:SEIC), Coach, Inc. (NYSE:COH), and ANSYS, Inc. (NASDAQ:ANSS) to get a better sense of its popularity.

According to most traders, hedge funds are seen as worthless, old financial vehicles of yesteryear. While there are more than 8000 funds in operation today, Our researchers look at the bigwigs of this group, approximately 700 funds. Most estimates calculate that this group of people manage the majority of all hedge funds’ total capital, and by following their top equity investments, Insider Monkey has found numerous investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, let’s take a glance at the latest action regarding Verisign, Inc. (NASDAQ:VRSN).

How are hedge funds trading Verisign, Inc. (NASDAQ:VRSN)?

At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 4% from the second quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Berkshire Hathaway has the most valuable position in Verisign, Inc. (NASDAQ:VRSN), worth close to $916.2 million, accounting for 0.7% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $353.8 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass D E Shaw, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Christopher Lyle’s SCGE Management.

Now, some big names were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in Verisign, Inc. (NASDAQ:VRSN). Balyasny Asset Management had $5.6 million invested in the company at the end of the quarter. Scott Fine and Peter Richards’s Empire Capital Management also initiated a $1.4 million position during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Mike Vranos’s Ellington, and Robert B. Gillam’s McKinley Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Verisign, Inc. (NASDAQ:VRSN) but similarly valued. We will take a look at SEI Investments Company (NASDAQ:SEIC), Coach, Inc. (NYSE:COH), ANSYS, Inc. (NASDAQ:ANSS), and IHS Inc. (NYSE:IHS). This group of stocks’ market valuations matches Verisign, Inc. (NASDAQ:VRSN)’s market valuation.

As you can see, these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $554 million. That figure was $1.97 billion in Verisign, Inc. (NASDAQ:VRSN)’s case. SEI Investments Company (NASDAQ:SEIC) is the most popular stock in this table. On the other hand, ANSYS, Inc. (NASDAQ:ANSS) is the least popular one with only 20 bullish hedge fund positions. Verisign, Inc. (NASDAQ:VRSN) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, SEI Investments Company (NASDAQ:SEIC) might be a better candidate to consider a long position.