With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was VCA Antech Inc (NASDAQ:WOOF).
VCA Antech Inc (NASDAQ:WOOF) was in 27 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. WOOF has experienced an increase in enthusiasm from smart money recently. There were 25 hedge funds in our database with WOOF positions at the end of the first quarter. Our calculations also showed that WOOF isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
James E. Flynn of Deerfield Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s review the recent hedge fund action encompassing VCA Antech Inc (NASDAQ:WOOF).
Do Hedge Funds Think WOOF Is A Good Stock To Buy Now?
At second quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in WOOF a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Healthcor Management LP was the largest shareholder of VCA Antech Inc (NASDAQ:WOOF), with a stake worth $110.8 million reported as of the end of June. Trailing Healthcor Management LP was Alyeska Investment Group, which amassed a stake valued at $57 million. Shannon River Fund Management, Candlestick Capital Management, and LMR 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 Healthcor Management LP allocated the biggest weight to VCA Antech Inc (NASDAQ:WOOF), around 4.43% of its 13F portfolio. Shannon River Fund Management is also relatively very bullish on the stock, dishing out 2.87 percent of its 13F equity portfolio to WOOF.
As aggregate interest increased, key hedge funds have been driving this bullishness. Shannon River Fund Management, managed by Spencer M. Waxman, assembled the biggest position in VCA Antech Inc (NASDAQ:WOOF). Shannon River Fund Management had $39.6 million invested in the company at the end of the quarter. Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital also initiated a $5.4 million position during the quarter. The other funds with brand new WOOF positions are Renaissance Technologies, Dmitry Balyasny’s Balyasny Asset Management, and Steve Cohen’s Point72 Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as VCA Antech Inc (NASDAQ:WOOF) but similarly valued. These stocks are Wyndham Hotels & Resorts, Inc. (NYSE:WH), First Industrial Realty Trust, Inc. (NYSE:FR), InVitae Corporation (NYSE:NVTA), OGE Energy Corp. (NYSE:OGE), Sonoco Products Company (NYSE:SON), Emcor Group Inc (NYSE:EME), and Lemonade, Inc. (NYSE:LMND). This group of stocks’ market valuations match WOOF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WH | 24 | 801135 | 0 |
| FR | 22 | 282144 | 2 |
| NVTA | 31 | 2151154 | -3 |
| OGE | 17 | 276770 | -6 |
| SON | 15 | 139239 | -10 |
| EME | 21 | 147705 | 1 |
| LMND | 15 | 182362 | -1 |
| Average | 20.7 | 568644 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $569 million. That figure was $321 million in WOOF’s case. InVitae Corporation (NYSE:NVTA) is the most popular stock in this table. On the other hand Sonoco Products Company (NYSE:SON) is the least popular one with only 15 bullish hedge fund positions. VCA Antech Inc (NASDAQ:WOOF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WOOF is 74.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately WOOF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WOOF were disappointed as the stock returned -0.2% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
