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Should I Buy Vertex Energy Inc (VTNR)?

·6 min read

In this article we will take a look at whether hedge funds think Vertex Energy Inc (NASDAQ:VTNR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Vertex Energy Inc (NASDAQ:VTNR) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds' portfolios at the end of March. Our calculations also showed that VTNR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 ImmuCell Corporation (NASDAQ:ICCC), Hudson Technologies, Inc. (NASDAQ:HDSN), and Dare Bioscience, Inc. (NASDAQ:DARE) to gather more data points.

In the eyes of most shareholders, hedge funds are seen as slow, old investment vehicles of the past. While there are greater than 8000 funds with their doors open at present, We choose to focus on the masters of this group, around 850 funds. It is estimated that this group of investors orchestrate the lion's share of all hedge funds' total asset base, and by keeping track of their unrivaled investments, Insider Monkey has deciphered many investment strategies that have historically beaten the broader indices. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

jim simons stocks portfolio investment
jim simons stocks portfolio investment

Jim Simons of Renaissance Technologies

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. With all of this in mind we're going to analyze the recent hedge fund action surrounding Vertex Energy Inc (NASDAQ:VTNR).

Do Hedge Funds Think VTNR Is A Good Stock To Buy Now?

At first quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. On the other hand, there were a total of 7 hedge funds with a bullish position in VTNR 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.

Is VTNR A Good Stock To Buy?
Is VTNR A Good Stock To Buy?

Among these funds, Tensile Capital held the most valuable stake in Vertex Energy Inc (NASDAQ:VTNR), which was worth $2.1 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $1 million worth of shares. Trellus Management Company, Citadel Investment Group, and Citadel Investment Group 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 Trellus Management Company allocated the biggest weight to Vertex Energy Inc (NASDAQ:VTNR), around 0.48% of its 13F portfolio. Tensile Capital is also relatively very bullish on the stock, designating 0.28 percent of its 13F equity portfolio to VTNR.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Vertex Energy Inc (NASDAQ:VTNR) but similarly valued. We will take a look at ImmuCell Corporation (NASDAQ:ICCC), Hudson Technologies, Inc. (NASDAQ:HDSN), Dare Bioscience, Inc. (NASDAQ:DARE), Hallmark Financial Services, Inc. (NASDAQ:HALL), United-Guardian, Inc. (NASDAQ:UG), IF Bancorp Inc (NASDAQ:IROQ), and Datasea Inc. (NASDAQ:DTSS). This group of stocks' market values match VTNR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ICCC,2,1921,0 HDSN,3,664,0 DARE,3,1717,0 HALL,9,3911,2 UG,2,6220,0 IROQ,2,5448,0 DTSS,1,125,0 Average,3.1,2858,0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.1 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $4 million in VTNR's case. Hallmark Financial Services, Inc. (NASDAQ:HALL) is the most popular stock in this table. On the other hand Datasea Inc. (NASDAQ:DTSS) is the least popular one with only 1 bullish hedge fund positions. Vertex Energy Inc (NASDAQ:VTNR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VTNR is 51.4. 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. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on VTNR as the stock returned 427.7% since the end of Q1 (through 6/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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