Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Veeva Systems Inc (NYSE:VEEV).
Veeva Systems Inc (NYSE:VEEV) has seen an increase in enthusiasm from smart money lately. VEEV was in 44 hedge funds’ portfolios at the end of December. There were 36 hedge funds in our database with VEEV positions at the end of the previous quarter. Our calculations also showed that VEEV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a glance at the fresh hedge fund action encompassing Veeva Systems Inc (NYSE:VEEV).
Hedge fund activity in Veeva Systems Inc (NYSE:VEEV)
Heading into the first quarter of 2020, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards VEEV over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Veeva Systems Inc (NYSE:VEEV), which was worth $192.6 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $112 million worth of shares. D E Shaw, Renaissance Technologies, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Diker Management allocated the biggest weight to Veeva Systems Inc (NYSE:VEEV), around 3.14% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 2.19 percent of its 13F equity portfolio to VEEV.
As aggregate interest increased, key money managers have jumped into Veeva Systems Inc (NYSE:VEEV) headfirst. PEAK6 Capital Management, managed by Matthew Hulsizer, created the largest position in Veeva Systems Inc (NYSE:VEEV). PEAK6 Capital Management had $9.8 million invested in the company at the end of the quarter. Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners also made a $9.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark N. Diker’s Diker Management, Parvinder Thiara’s Athanor Capital, and Robert B. Gillam’s McKinley Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Veeva Systems Inc (NYSE:VEEV) but similarly valued. These stocks are Brown-Forman Corporation (NYSE:BF), Nokia Corporation (NYSE:NOK), Skyworks Solutions Inc (NASDAQ:SWKS), and CDW Corporation (NASDAQ:CDW). All of these stocks’ market caps resemble VEEV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BF | 23 | 609563 | 1 |
| NOK | 16 | 227900 | -8 |
| SWKS | 43 | 1178499 | 17 |
| CDW | 30 | 1085374 | 0 |
| Average | 28 | 775334 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $775 million. That figure was $766 million in VEEV’s case. Skyworks Solutions Inc (NASDAQ:SWKS) is the most popular stock in this table. On the other hand Nokia Corporation (NYSE:NOK) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Veeva Systems Inc (NYSE:VEEV) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 1.3% in 2020 through May 1st but still managed to beat the market by 12.9 percentage points. Hedge funds were also right about betting on VEEV as the stock returned 33.5% so far in 2020 (through May 1st) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
