Is Vector Group Ltd (NYSE:VGR) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Vector Group Ltd (NYSE:VGR) was in 18 hedge funds' portfolios at the end of the third quarter of 2018. VGR investors should pay attention to an increase in hedge fund sentiment lately. There were 17 hedge funds in our database with VGR holdings at the end of the previous quarter. Our calculations also showed that vgr isn't among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
We're going to check out the key hedge fund action encompassing Vector Group Ltd (NYSE:VGR).
What does the smart money think about Vector Group Ltd (NYSE:VGR)?
At Q3's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VGR over the last 13 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Vector Group Ltd (NYSE:VGR) was held by Renaissance Technologies, which reported holding $137.9 million worth of stock at the end of September. It was followed by Millennium Management with a $9.8 million position. Other investors bullish on the company included Two Sigma Advisors, GLG Partners, and Gotham Asset Management.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in Vector Group Ltd (NYSE:VGR). Marshall Wace LLP had $2.5 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.8 million investment in the stock during the quarter. The other funds with brand new VGR positions are George Zweig, Shane Haas and Ravi Chander's Signition LP and Michael Platt and William Reeves's BlueCrest Capital Mgmt..
Let's now review hedge fund activity in other stocks similar to Vector Group Ltd (NYSE:VGR). We will take a look at Cars.com Inc. (NYSE:CARS), The Greenbrier Companies, Inc. (NYSE:GBX), HNI Corp (NYSE:HNI), and International Speedway Corporation (NASDAQ:ISCA). This group of stocks' market caps match VGR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CARS,30,447879,7 GBX,15,105838,-7 HNI,10,25685,0 ISCA,17,174152,-2 Average,18,188389,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $174 million in VGR's case. Cars.com Inc. (NYSE:CARS) is the most popular stock in this table. On the other hand HNI Corp (NYSE:HNI) is the least popular one with only 10 bullish hedge fund positions. Vector Group Ltd (NYSE:VGR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. In this regard CARS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.