The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtVirtus Investment Partners Inc (NASDAQ:VRTS) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is Virtus Investment Partners Inc (NASDAQ:VRTS) the right investment to pursue these days? Prominent investors were getting less optimistic. The number of bullish hedge fund positions retreated by 2 in recent months. Our calculations also showed that VRTS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). VRTS was in 12 hedge funds' portfolios at the end of the first quarter of 2020. There were 14 hedge funds in our database with VRTS positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
[caption id="attachment_27676" align="aligncenter" width="355"] Israel Englander of Millennium Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a gander at the key hedge fund action regarding Virtus Investment Partners Inc (NASDAQ:VRTS).
How have hedgies been trading Virtus Investment Partners Inc (NASDAQ:VRTS)?
Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in VRTS a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Point72 Asset Management, managed by Steve Cohen, holds the biggest position in Virtus Investment Partners Inc (NASDAQ:VRTS). Point72 Asset Management has a $12.1 million position in the stock, comprising 0.1% of its 13F portfolio. On Point72 Asset Management's heels is Newtyn Management, led by Noah Levy and Eugene Dozortsev, holding a $8.8 million position; the fund has 3% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Israel Englander's Millennium Management, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position AWH Capital allocated the biggest weight to Virtus Investment Partners Inc (NASDAQ:VRTS), around 8.24% of its 13F portfolio. Newtyn Management is also relatively very bullish on the stock, setting aside 3.03 percent of its 13F equity portfolio to VRTS.
Seeing as Virtus Investment Partners Inc (NASDAQ:VRTS) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedgies that slashed their entire stakes by the end of the first quarter. It's worth mentioning that Andrew Weiss's Weiss Asset Management dumped the largest stake of all the hedgies followed by Insider Monkey, worth about $25.8 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund dumped about $16.5 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Virtus Investment Partners Inc (NASDAQ:VRTS) but similarly valued. We will take a look at Franks International NV (NYSE:FI), New York Mortgage Trust, Inc. (NASDAQ:NYMT), Hanger, Inc. (NYSE:HNGR), and Cerence Inc. (NASDAQ:CRNC). This group of stocks' market values are closest to VRTS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FI,7,5437,-3 NYMT,13,15134,-2 HNGR,15,50523,0 CRNC,11,66375,-11 Average,11.5,34367,-4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $41 million in VRTS's case. Hanger, Inc. (NYSE:HNGR) is the most popular stock in this table. On the other hand Franks International NV (NYSE:FI) is the least popular one with only 7 bullish hedge fund positions. Virtus Investment Partners Inc (NASDAQ:VRTS) is not the most popular stock in this group but hedge fund interest is still above average. 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 gained 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on VRTS as the stock returned 54.1% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Get real-time email alerts: Follow Virtus Investment Partners Inc. (NASDAQ:VRTS)
Disclosure: None. This article was originally published at Insider Monkey.