VimpelCom Ltd (ADR) (VIP): Hedge Fund Sentiment Unchanged

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

VimpelCom Ltd (ADR) (NYSE:VIP) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Mednax Inc. (NYSE:MD), Arthur J. Gallagher & Co. (NYSE:AJG), and Synopsys, Inc. (NASDAQ:SNPS) to gather more data points.

To most traders, hedge funds are seen as underperforming, outdated financial tools of years past. While there are greater than 8000 funds trading at present, Our experts choose to focus on the upper echelon of this group, around 700 funds. Most estimates calculate that this group of people shepherd the lion’s share of all hedge funds’ total asset base, and by tracking their top investments, Insider Monkey has formulated a few investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, let’s take a peek at the latest action encompassing VimpelCom Ltd (ADR) (NYSE:VIP).

How are hedge funds trading VimpelCom Ltd (ADR) (NYSE:VIP)?

At the Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, flat over the quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Abrams Capital Management, managed by David Abrams, holds the number one position in VimpelCom Ltd (ADR) (NYSE:VIP). Abrams Capital Management has a $42 million position in the stock, comprising 3% of its 13F portfolio. Coming in second is Josh Resnick’s Jericho Capital Asset Management, with a $30.7 million position; 1.9% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions include Clint Carlson’s Carlson Capital, Howard Marks’ Oaktree Capital Management, and Thomas Steyer’s Farallon Capital.

Due to the fact that VimpelCom Ltd (ADR) (NYSE:VIP) has witnessed falling interest from the smart money, it’s easy to see that there is a sect of fund managers that slashed their full holdings last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group said goodbye to the largest position of the “upper crust” of funds followed by Insider Monkey, comprising close to $0.3 million in stock. Paul Tudor Jones’ fund, Tudor Investment Corp, also said goodbye to its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to VimpelCom Ltd (ADR) (NYSE:VIP). These stocks are Mednax Inc. (NYSE:MD), Arthur J. Gallagher & Co. (NYSE:AJG), Synopsys, Inc. (NASDAQ:SNPS), and Mobile TeleSystems OJSC (ADR) (NYSE:MBT). This group of stocks’ market values match VIP’s market value.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $122 million in VIP’s case. Mednax Inc. (NYSE:MD) is the most popular stock in this table, while Mobile TeleSystems OJSC (ADR) (NYSE:MBT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks VimpelCom Ltd (ADR) (NYSE:VIP) is even less popular than MBT. 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.