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Hedge Fund Sentiment Is Stagnant On V.F. Corporation (VFC)

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  • VFC

With the first-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 second quarter of 2021. One of these stocks was V.F. Corporation (NYSE:VFC).

Hedge fund interest in V.F. Corporation (NYSE:VFC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that VFC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare VFC to other stocks including NatWest Group plc (NYSE:NWG), McKesson Corporation (NYSE:MCK), and AutoZone, Inc. (NYSE:AZO) to get a better sense of its popularity.

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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

SAC CAPITAL ADVISORS
SAC CAPITAL ADVISORS

Steven Cohen of Point72 Asset 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 we're going to review the new hedge fund action regarding V.F. Corporation (NYSE:VFC).

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

At Q1's end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VFC over the last 23 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in V.F. Corporation (NYSE:VFC) was held by Diamond Hill Capital, which reported holding $412.2 million worth of stock at the end of December. It was followed by Point72 Asset Management with a $103.9 million position. Other investors bullish on the company included Renaissance Technologies, Candlestick Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Diamond Hill Capital allocated the biggest weight to V.F. Corporation (NYSE:VFC), around 1.67% of its 13F portfolio. Candlestick Capital Management is also relatively very bullish on the stock, earmarking 1.62 percent of its 13F equity portfolio to VFC.

Since V.F. Corporation (NYSE:VFC) has faced falling interest from the aggregate hedge fund industry, we can see that there exists a select few hedgies that decided to sell off their entire stakes last quarter. Interestingly, James Parsons's Junto Capital Management cut the biggest investment of the "upper crust" of funds followed by Insider Monkey, comprising an estimated $68.9 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also cut its stock, about $23.4 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's go over hedge fund activity in other stocks similar to V.F. Corporation (NYSE:VFC). We will take a look at NatWest Group plc (NYSE:NWG), McKesson Corporation (NYSE:MCK), AutoZone, Inc. (NYSE:AZO), The Trade Desk, Inc. (NASDAQ:TTD), Rockwell Automation Inc. (NYSE:ROK), Delta Air Lines, Inc. (NYSE:DAL), and Nutrien Ltd. (NYSE:NTR). This group of stocks' market caps are similar to VFC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NWG,6,4359,3 MCK,51,2123043,0 AZO,34,754312,-10 TTD,35,812891,0 ROK,26,442334,-9 DAL,50,1099712,-8 NTR,33,895159,8 Average,33.6,875973,-2.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.6 hedge funds with bullish positions and the average amount invested in these stocks was $876 million. That figure was $1109 million in VFC's case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 6 bullish hedge fund positions. V.F. Corporation (NYSE:VFC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VFC is 58.6. 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 negative signal and 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately VFC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); VFC investors were disappointed as the stock returned 6.3% since the end of March (through 7/2) 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 most of these stocks already outperformed the market in 2021.

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