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Hedge Funds Are Buying Verisk Analytics, Inc. (VRSK)

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In this article you are going to find out whether hedge funds think Verisk Analytics, Inc. (NASDAQ:VRSK) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Verisk Analytics, Inc. (NASDAQ:VRSK) investors should be aware of an increase in enthusiasm from smart money in recent months. Verisk Analytics, Inc. (NASDAQ:VRSK) was in 36 hedge funds' portfolios at the end of June. The all time high for this statistic is 40. There were 34 hedge funds in our database with VRSK positions at the end of the first quarter. Our calculations also showed that VRSK isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To the average investor there are a multitude of formulas investors employ to evaluate publicly traded companies. A duo of the most under-the-radar formulas are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top hedge fund managers can beat the broader indices by a superb amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Charles Akre Akre Capital Management
Charles Akre Akre Capital Management

Charles Akre of Akre Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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 view the new hedge fund action surrounding Verisk Analytics, Inc. (NASDAQ:VRSK).

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

At the end of the second quarter, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. By comparison, 36 hedge funds held shares or bullish call options in VRSK a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Ian Simm's Impax Asset Management has the biggest position in Verisk Analytics, Inc. (NASDAQ:VRSK), worth close to $441 million, comprising 1.9% of its total 13F portfolio. Sitting at the No. 2 spot is Akre Capital Management, managed by Charles Akre, which holds a $427.5 million position; 2.6% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions include Guardian Capital's GuardCap Asset Management, Terry Smith's Fundsmith LLP and Greg Poole's Echo Street Capital Management. In terms of the portfolio weights assigned to each position Akre Capital Management allocated the biggest weight to Verisk Analytics, Inc. (NASDAQ:VRSK), around 2.63% of its 13F portfolio. Bishop Rock Capital is also relatively very bullish on the stock, earmarking 2.4 percent of its 13F equity portfolio to VRSK.

As one would reasonably expect, key money managers have been driving this bullishness. Greenhouse Funds, managed by Joe Milano, established the largest call position in Verisk Analytics, Inc. (NASDAQ:VRSK). Greenhouse Funds had $21.2 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $19.2 million position during the quarter. The other funds with brand new VRSK positions are Peter Seuss's Prana Capital Management, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, and Mikal Patel's Oribel Capital Management.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Verisk Analytics, Inc. (NASDAQ:VRSK) but similarly valued. We will take a look at Maxim Integrated Products Inc. (NASDAQ:MXIM), Synchrony Financial (NYSE:SYF), WEC Energy Group, Inc. (NYSE:WEC), American Water Works Company, Inc. (NYSE:AWK), Magna International Inc. (NYSE:MGA), Yum China Holdings, Inc. (NYSE:YUMC), and Lufax Holding Ltd (NYSE:LU). This group of stocks' market valuations are similar to VRSK's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MXIM,56,4210328,1 SYF,39,1541005,-10 WEC,27,499940,10 AWK,30,1076976,0 MGA,39,576231,5 YUMC,32,913525,-2 LU,19,357817,10 Average,34.6,1310832,2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $1311 million. That figure was $1738 million in VRSK's case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand Lufax Holding Ltd (NYSE:LU) is the least popular one with only 19 bullish hedge fund positions. Verisk Analytics, Inc. (NASDAQ:VRSK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRSK is 57. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on VRSK as the stock returned 18.4% since the end of Q2 (through 10/11) 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.