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Hedge Funds Cautiously Watching Viad Corp (VVI)

Abigail Fisher

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Viad Corp (NYSE:VVI) based on that data.

Hedge fund interest in Viad Corp (NYSE:VVI) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Ribbon Communications Inc. (NASDAQ:RBBN), MTS Systems Corporation (NASDAQ:MTSC), and Heidrick & Struggles International, Inc. (NASDAQ:HSII) to gather more data points. Our calculations also showed that VVI 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). 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_262336" align="aligncenter" width="393"] J. Carlo Cannell of Cannell CapitalJ. Carlo Cannell[/caption]

Carlo Cannell

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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 let's check out the recent hedge fund action encompassing Viad Corp (NYSE:VVI).

What have hedge funds been doing with Viad Corp (NYSE:VVI)?

At the end of the first quarter, a total of 14 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 VVI over the last 18 quarters. 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, Moab Capital Partners was the largest shareholder of Viad Corp (NYSE:VVI), with a stake worth $17.6 million reported as of the end of September. Trailing Moab Capital Partners was East Side Capital (RR Partners), which amassed a stake valued at $14.1 million. Millennium Management, Cannell Capital, and GMT Capital 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 Moab Capital Partners allocated the biggest weight to Viad Corp (NYSE:VVI), around 7.32% of its 13F portfolio. Bandera Partners is also relatively very bullish on the stock, setting aside 3.61 percent of its 13F equity portfolio to VVI.

Seeing as Viad Corp (NYSE:VVI) has witnessed declining sentiment from hedge fund managers, we can see that there is a sect of funds that decided to sell off their entire stakes heading into Q4. It's worth mentioning that Mark Broach's Manatuck Hill Partners cut the largest position of the 750 funds watched by Insider Monkey, valued at an estimated $8.9 million in stock, and Martin Whitman's Third Avenue Management was right behind this move, as the fund dumped about $4.9 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Viad Corp (NYSE:VVI) but similarly valued. These stocks are Ribbon Communications Inc. (NASDAQ:RBBN), MTS Systems Corporation (NASDAQ:MTSC), Heidrick & Struggles International, Inc. (NASDAQ:HSII), and Denny's Corporation (NASDAQ:DENN). This group of stocks' market values are closest to VVI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RBBN,11,19349,2 MTSC,14,33819,4 HSII,13,83980,-2 DENN,20,50592,-1 Average,14.5,46935,0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $67 million in VVI's case. Denny's Corporation (NASDAQ:DENN) is the most popular stock in this table. On the other hand Ribbon Communications Inc. (NASDAQ:RBBN) is the least popular one with only 11 bullish hedge fund positions. Viad Corp (NYSE:VVI) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately VVI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); VVI investors were disappointed as the stock returned -17.9% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

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