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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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2020. What do these smart investors think about Veritex Holdings Inc (NASDAQ:VBTX)?
Veritex Holdings Inc (NASDAQ:VBTX) investors should be aware of a decrease in activity from the world's largest hedge funds lately. Veritex Holdings Inc (NASDAQ:VBTX) was in 8 hedge funds' portfolios at the end of September. The all time high for this statistics is 17. Our calculations also showed that VBTX isn't among the 30 most popular stocks among hedge funds (click for Q3 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 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Anton Schutz of Mendon Capital Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's check out the key hedge fund action surrounding Veritex Holdings Inc (NASDAQ:VBTX).
How have hedgies been trading Veritex Holdings Inc (NASDAQ:VBTX)?
At Q3's end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in VBTX a year ago. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Veritex Holdings Inc (NASDAQ:VBTX) was held by Mendon Capital Advisors, which reported holding $11.2 million worth of stock at the end of September. It was followed by Forest Hill Capital with a $6.7 million position. Other investors bullish on the company included Millennium Management, Arrowstreet Capital, and EJF Capital. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to Veritex Holdings Inc (NASDAQ:VBTX), around 6.56% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, earmarking 3.03 percent of its 13F equity portfolio to VBTX.
Since Veritex Holdings Inc (NASDAQ:VBTX) has experienced declining sentiment from the entirety of the hedge funds we track, it's easy to see that there exists a select few hedge funds that slashed their full holdings last quarter. It's worth mentioning that Ken Griffin's Citadel Investment Group dropped the largest stake of the "upper crust" of funds followed by Insider Monkey, comprising close to $2.2 million in stock, and Renaissance Technologies was right behind this move, as the fund said goodbye to about $0.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Veritex Holdings Inc (NASDAQ:VBTX) but similarly valued. We will take a look at ProAssurance Corporation (NYSE:PRA), Vericel Corp (NASDAQ:VCEL), Morphic Holding, Inc. (NASDAQ:MORF), Cango Inc. (NYSE:CANG), Diversified Healthcare Trust (NASDAQ:DHC), General American Investors Company, Inc. (NYSE:GAM), and Sprott Inc. (NYSE:SII). This group of stocks' market caps are similar to VBTX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PRA,16,116211,-1 VCEL,20,123596,3 MORF,8,112234,1 CANG,2,254,1 DHC,12,25000,-2 GAM,4,28358,1 SII,14,103508,6 Average,10.9,72737,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.9 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $30 million in VBTX's case. Vericel Corp (NASDAQ:VCEL) is the most popular stock in this table. On the other hand Cango Inc. (NYSE:CANG) is the least popular one with only 2 bullish hedge fund positions. Veritex Holdings Inc (NASDAQ:VBTX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VBTX is 31.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on VBTX as the stock returned 32.4% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.