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Hedge Funds Are Dumping Veeva Systems Inc (VEEV)

Abigail Fisher

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. In this article we look at what those investors think of Veeva Systems Inc (NYSE:VEEV).

Is Veeva Systems Inc (NYSE:VEEV) a healthy stock for your portfolio? Prominent investors are in a pessimistic mood. The number of bullish hedge fund positions retreated by 11 lately. Our calculations also showed that VEEV 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_30600" align="aligncenter" width="398"] Bruce Kovner of Caxton Associates LP[/caption]

Bruce Kovner, Caxton Associates LP

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the key hedge fund action surrounding Veeva Systems Inc (NYSE:VEEV).

Hedge fund activity in Veeva Systems Inc (NYSE:VEEV)

Heading into the second quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VEEV over the last 18 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, Arrowstreet Capital held the most valuable stake in Veeva Systems Inc (NYSE:VEEV), which was worth $62.8 million at the end of the third quarter. On the second spot was D E Shaw which amassed $59.1 million worth of shares. Citadel Investment Group, Skye Global Management, and Zevenbergen Capital Investments 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 Diker Management allocated the biggest weight to Veeva Systems Inc (NYSE:VEEV), around 4.39% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 3.45 percent of its 13F equity portfolio to VEEV.

Seeing as Veeva Systems Inc (NYSE:VEEV) has experienced falling interest from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of fund managers who were dropping their entire stakes in the third quarter. Interestingly, Ken Griffin's Citadel Investment Group said goodbye to the biggest position of the "upper crust" of funds followed by Insider Monkey, totaling close to $17.6 million in stock, and Mark Wolfson and Jamie Alexander's Jasper Ridge Partners was right behind this move, as the fund sold off about $9.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 11 funds in the third quarter.

Let's check out hedge fund activity in other stocks similar to Veeva Systems Inc (NYSE:VEEV). These stocks are SYSCO Corporation (NYSE:SYY), Capital One Financial Corp. (NYSE:COF), Canon Inc. (NYSE:CAJ), and Equity Residential (NYSE:EQR). All of these stocks' market caps match VEEV's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SYY,35,1783679,7 COF,50,1107098,0 CAJ,7,46934,-1 EQR,24,175386,-6 Average,29,778274,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $778 million. That figure was $353 million in VEEV's case. Capital One Financial Corp. (NYSE:COF) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 7 bullish hedge fund positions. Veeva Systems Inc (NYSE:VEEV) 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on VEEV as the stock returned 40% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

[company-follow-email id=1393052][/company-follow-email]

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

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