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 gone over 730 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 28th. In this article we look at what those investors think of Vera Bradley, Inc. (NASDAQ:VRA).
Vera Bradley, Inc. (NASDAQ:VRA) shareholders have witnessed a decrease in hedge fund interest of late. Our calculations also showed that VRA isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to review the new hedge fund action surrounding Vera Bradley, Inc. (NASDAQ:VRA).
Hedge fund activity in Vera Bradley, Inc. (NASDAQ:VRA)
At the end of the second quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VRA over the last 16 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Vera Bradley, Inc. (NASDAQ:VRA), which was worth $13.6 million at the end of the second quarter. On the second spot was AQR Capital Management which amassed $11.6 million worth of shares. Moreover, Ancora Advisors, Arrowstreet Capital, and Royce & Associates were also bullish on Vera Bradley, Inc. (NASDAQ:VRA), allocating a large percentage of their portfolios to this stock.
Seeing as Vera Bradley, Inc. (NASDAQ:VRA) has experienced a decline in interest from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of fund managers that elected to cut their entire stakes in the second quarter. At the top of the heap, Andrew Feldstein and Stephen Siderow's Blue Mountain Capital dumped the largest stake of all the hedgies tracked by Insider Monkey, totaling about $1 million in stock, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund dropped about $0.6 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds in the second quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Vera Bradley, Inc. (NASDAQ:VRA) but similarly valued. These stocks are NextCure, Inc. (NASDAQ:NXTC), Unity Biotechnology, Inc. (NASDAQ:UBX), Cambridge Bancorp (NASDAQ:CATC), and Nam Tai Property Inc (NYSE:NTP). This group of stocks' market caps are closest to VRA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NXTC,8,92180,8 UBX,5,13510,1 CATC,5,16665,1 NTP,7,68438,2 Average,6.25,47698,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $54 million in VRA's case. NextCure, Inc. (NASDAQ:NXTC) is the most popular stock in this table. On the other hand Unity Biotechnology, Inc. (NASDAQ:UBX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Vera Bradley, Inc. (NASDAQ:VRA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately VRA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on VRA were disappointed as the stock returned -15.8% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
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