Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Visteon Corp (NASDAQ:VC).
If you'd ask most traders, hedge funds are assumed to be unimportant, outdated financial tools of years past. While there are greater than 8000 funds in operation at the moment, Our researchers hone in on the elite of this club, about 750 funds. Most estimates calculate that this group of people manage the majority of the hedge fund industry's total capital, and by keeping track of their top equity investments, Insider Monkey has figured out a number of investment strategies that have historically beaten the broader indices. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We're going to take a gander at the latest hedge fund action encompassing Visteon Corp (NASDAQ:VC).
How have hedgies been trading Visteon Corp (NASDAQ:VC)?
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in VC a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Israel Englander's Millennium Management has the number one position in Visteon Corp (NASDAQ:VC), worth close to $54.7 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $43.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish comprise Gregg J. Powers's Private Capital Management, Douglas T. Granat's Trigran Investments and Douglas T. Granat's Trigran Investments.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Visteon Corp (NASDAQ:VC) headfirst. Stevens Capital Management, managed by Matthew Tewksbury, assembled the most valuable position in Visteon Corp (NASDAQ:VC). Stevens Capital Management had $1.5 million invested in the company at the end of the quarter. Javier Velazquez's Albar Capital also made a $1.4 million investment in the stock during the quarter. The other funds with brand new VC positions are Andrew Feldstein and Stephen Siderow's Blue Mountain Capital, Brandon Haley's Holocene Advisors, and Michael Platt and William Reeves's BlueCrest Capital Mgmt..
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Visteon Corp (NASDAQ:VC) but similarly valued. These stocks are HFF, Inc. (NYSE:HF), Banner Corporation (NASDAQ:BANR), Nevro Corp (NYSE:NVRO), and Advanced Energy Industries, Inc. (NASDAQ:AEIS). All of these stocks' market caps resemble VC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HF,11,70647,-2 BANR,18,94129,0 NVRO,32,511895,12 AEIS,17,149934,2 Average,19.5,206651,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $207 million. That figure was $190 million in VC's case. Nevro Corp (NYSE:NVRO) is the most popular stock in this table. On the other hand HFF, Inc. (NYSE:HF) is the least popular one with only 11 bullish hedge fund positions. Visteon Corp (NASDAQ:VC) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately VC wasn't nearly as popular as these 20 stocks and hedge funds that were betting on VC were disappointed as the stock returned -28.7% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.