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We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Valhi, Inc. (NYSE:VHI) based on that data.
Valhi, Inc. (NYSE:VHI) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of March. Our calculations also showed that VHI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Bank First Corp (NASDAQ:BFC), Genius Brands International, Inc. (NASDAQ:GNUS), and Aspen Aerogels Inc (NYSE:ASPN) to gather more data points.
At the moment there are a large number of indicators market participants employ to size up publicly traded companies. Some of the most underrated indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outclass the S&P 500 by a solid margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Michael Gelband of ExodusPoint Capital
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Do Hedge Funds Think VHI Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VHI over the last 23 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.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Valhi, Inc. (NYSE:VHI), worth close to $3.2 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Invenomic Capital Management, led by Ali Motamed, holding a $1.7 million position; 0.4% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish include Israel Englander's Millennium Management, Michael Gelband's ExodusPoint Capital and . In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to Valhi, Inc. (NYSE:VHI), around 0.37% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.004 percent of its 13F equity portfolio to VHI.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's go over hedge fund activity in other stocks similar to Valhi, Inc. (NYSE:VHI). These stocks are Bank First Corp (NASDAQ:BFC), Genius Brands International, Inc. (NASDAQ:GNUS), Aspen Aerogels Inc (NYSE:ASPN), Ontrak, Inc. (NASDAQ:OTRK), Magenta Therapeutics, Inc. (NASDAQ:MGTA), Dynex Capital Inc (NYSE:DX), and Rayonier Advanced Materials Inc (NYSE:RYAM). This group of stocks' market valuations match VHI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BFC,4,1520,2 GNUS,6,5422,0 ASPN,13,88783,4 OTRK,7,11834,-6 MGTA,17,123130,1 DX,10,23691,0 RYAM,16,60987,3 Average,10.4,45052,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.4 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $7 million in VHI's case. Magenta Therapeutics, Inc. (NASDAQ:MGTA) is the most popular stock in this table. On the other hand Bank First Corp (NASDAQ:BFC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Valhi, Inc. (NYSE:VHI) is even less popular than BFC. Our overall hedge fund sentiment score for VHI is 17. 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. Hedge funds clearly dropped the ball on VHI as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on VHI as the stock returned 36.6% since Q1 (through June 11th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.