Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds’ top 30 stock picks easily bested the broader market, at 6.7% compared to 2.6%, despite there being a few duds in there like Facebook (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is Vicor Corp (NASDAQ:VICR) the right pick for your portfolio? The best stock pickers are buying. The number of long hedge fund positions increased by 6 recently. Our calculations also showed that VICR isn’t among the 30 most popular stocks among hedge funds.
To most investors, hedge funds are assumed to be worthless, old investment tools of years past. While there are greater than 8,000 funds with their doors open at the moment, Our experts choose to focus on the elite of this group, around 700 funds. These money managers orchestrate bulk of all hedge funds’ total asset base, and by tracking their matchless picks, Insider Monkey has brought to light various investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by 6 percentage points per 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.
Let’s take a look at the fresh hedge fund action encompassing Vicor Corp (NASDAQ:VICR).
How are hedge funds trading Vicor Corp (NASDAQ:VICR)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 60% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VICR over the last 13 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Alok Agrawal’s Bloom Tree Partners has the largest position in Vicor Corp (NASDAQ:VICR), worth close to $21.2 million, amounting to 1.9% of its total 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $11 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions encompass Spencer M. Waxman’s Shannon River Fund Management, Adam Usdan’s Trellus Management Company and Mark Broach’s Manatuck Hill Partners.
Consequently, key hedge funds were breaking ground themselves. Bloom Tree Partners, managed by Alok Agrawal, created the most valuable position in Vicor Corp (NASDAQ:VICR). Bloom Tree Partners had $21.2 million invested in the company at the end of the quarter. Spencer M. Waxman’s Shannon River Fund Management also made a $6.6 million investment in the stock during the quarter. The other funds with brand new VICR positions are D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management, and David Costen Haley’s HBK Investments.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Vicor Corp (NASDAQ:VICR) but similarly valued. These stocks are Bloomin’ Brands Inc (NASDAQ:BLMN), Guess’, Inc. (NYSE:GES), NxStage Medical, Inc. (NASDAQ:NXTM), and WillScot Corporation (NASDAQ:WSC). This group of stocks’ market valuations resemble VICR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BLMN | 26 | 372151 | 3 |
| GES | 17 | 81212 | -1 |
| NXTM | 32 | 528339 | 0 |
| WSC | 26 | 261579 | -5 |
| Average | 25.25 | 310820 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $311 million. That figure was $73 million in VICR’s case. NxStage Medical, Inc. (NASDAQ:NXTM) is the most popular stock in this table. On the other hand Guess’, Inc. (NYSE:GES) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Vicor Corp (NASDAQ:VICR) is even less popular than GES. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.
