Hedge Funds Are Piling Into Vicor Corp (VICR)
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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Vicor Corp (NASDAQ:VICR) and determine whether the smart money was really smart about this stock.
Vicor Corp (NASDAQ:VICR) shareholders have witnessed an increase in hedge fund interest recently. Vicor Corp (NASDAQ:VICR) was in 19 hedge funds' portfolios at the end of June. The all time high for this statistics is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 14 hedge funds in our database with VICR holdings at the end of March. Our calculations also showed that VICR isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Matthew Hulsizer of PEAK6 Capital
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 are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we're going to take a look at the fresh hedge fund action regarding Vicor Corp (NASDAQ:VICR).
Hedge fund activity in Vicor Corp (NASDAQ:VICR)
Heading into the third quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 36% from the first quarter of 2020. On the other hand, there were a total of 13 hedge funds with a bullish position in VICR a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Richard Driehaus's Driehaus Capital has the biggest position in Vicor Corp (NASDAQ:VICR), worth close to $32.4 million, amounting to 0.8% of its total 13F portfolio. The second largest stake is held by PEAK6 Capital Management, managed by Matthew Hulsizer, which holds a $16.9 million call position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions comprise Adam Usdan's Trellus Management Company, Josh Goldberg's G2 Investment Partners Management and Mark Broach's Manatuck Hill Partners. In terms of the portfolio weights assigned to each position Trellus Management Company allocated the biggest weight to Vicor Corp (NASDAQ:VICR), around 10.12% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, setting aside 4.12 percent of its 13F equity portfolio to VICR.
As aggregate interest increased, key hedge funds were breaking ground themselves. Winton Capital Management, managed by David Harding, created the largest position in Vicor Corp (NASDAQ:VICR). Winton Capital Management had $1.4 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are Marc Majzner's Clearline Capital, Will Graves's Boardman Bay Capital Management, and Greg Eisner's Engineers Gate Manager.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Vicor Corp (NASDAQ:VICR) but similarly valued. These stocks are New Residential Investment Corp (NYSE:NRZ), Companhia Paranaense de Energia (NYSE:ELP), Vivint Smart Home, Inc. (NYSE:VVNT), Alkermes Plc (NASDAQ:ALKS), Gildan Activewear Inc (NYSE:GIL), Aaron's, Inc. (NYSE:AAN), and Balchem Corporation (NASDAQ:BCPC). This group of stocks' market valuations are closest to VICR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NRZ,22,121379,-1 ELP,12,39175,5 VVNT,5,5836,-4 ALKS,26,702713,-4 GIL,22,432391,0 AAN,27,334862,2 BCPC,17,77576,4 Average,18.7,244847,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $82 million in VICR's case. Aaron's, Inc. (NYSE:AAN) is the most popular stock in this table. On the other hand Vivint Smart Home, Inc. (NYSE:VVNT) is the least popular one with only 5 bullish hedge fund positions. Vicor Corp (NASDAQ:VICR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VICR is 71.8. 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. This is a slightly positive signal but 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 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately VICR wasn't nearly as popular as these 10 stocks and hedge funds that were betting on VICR were disappointed as the stock returned 8% in Q3 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
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