Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Verisign, Inc. (NASDAQ:VRSN) based on that data.
Verisign, Inc. (NASDAQ:VRSN) shareholders have witnessed an increase in hedge fund sentiment in recent months. VRSN was in 41 hedge funds' portfolios at the end of March. There were 38 hedge funds in our database with VRSN holdings at the end of the previous quarter. Our calculations also showed that VRSN 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 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 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_256989" align="aligncenter" width="397"] Dmitry Balyasny of Balyasny Asset Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. 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 view the recent hedge fund action surrounding Verisign, Inc. (NASDAQ:VRSN).
What have hedge funds been doing with Verisign, Inc. (NASDAQ:VRSN)?
At the end of the first quarter, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 31 hedge funds with a bullish position in VRSN a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Berkshire Hathaway was the largest shareholder of Verisign, Inc. (NASDAQ:VRSN), with a stake worth $2308 million reported as of the end of September. Trailing Berkshire Hathaway was Renaissance Technologies, which amassed a stake valued at $1459.7 million. D E Shaw, Cantillon Capital Management, and AQR Capital Management 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 Atalan Capital allocated the biggest weight to Verisign, Inc. (NASDAQ:VRSN), around 14.11% of its 13F portfolio. Highside Global Management is also relatively very bullish on the stock, dishing out 7.76 percent of its 13F equity portfolio to VRSN.
Now, key hedge funds have been driving this bullishness. Stockbridge Partners, managed by Sharlyn C. Heslam, created the most outsized position in Verisign, Inc. (NASDAQ:VRSN). Stockbridge Partners had $123.7 million invested in the company at the end of the quarter. Jacob Doft's Highline Capital Management also initiated a $31.3 million position during the quarter. The other funds with brand new VRSN positions are Lee Hicks and Jan Koerner's Park Presidio Capital, Zach Petrone's Highside Global Management, and Dmitry Balyasny's Balyasny Asset Management.
Let's also examine hedge fund activity in other stocks similar to Verisign, Inc. (NASDAQ:VRSN). These stocks are EOG Resources Inc (NYSE:EOG), Zimmer Biomet Holdings Inc (NYSE:ZBH), IQVIA Holdings, Inc. (NYSE:IQV), and ZTO Express (Cayman) Inc. (NYSE:ZTO). All of these stocks' market caps match VRSN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EOG,44,801052,1 ZBH,51,621129,-13 IQV,60,2473750,-4 ZTO,15,562997,1 Average,42.5,1114732,-3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.5 hedge funds with bullish positions and the average amount invested in these stocks was $1115 million. That figure was $5645 million in VRSN's case. IQVIA Holdings, Inc. (NYSE:IQV) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 15 bullish hedge fund positions. Verisign, Inc. (NASDAQ:VRSN) is not the least popular stock in this group but hedge fund interest is still below 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 and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on VRSN as the stock returned 21.6% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.