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The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Veeco Instruments Inc. (NASDAQ:VECO).
Is Veeco Instruments Inc. (NASDAQ:VECO) a good investment today? Investors who are in the know are buying. The number of long hedge fund bets increased by 3 in recent months. Our calculations also showed that VECO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a look at the latest hedge fund action regarding Veeco Instruments Inc. (NASDAQ:VECO).
What does smart money think about Veeco Instruments Inc. (NASDAQ:VECO)?
At Q3's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VECO over the last 17 quarters. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Veeco Instruments Inc. (NASDAQ:VECO) was held by Lynrock Lake, which reported holding $124.3 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $15.1 million position. Other investors bullish on the company included D E Shaw, Renaissance Technologies, and Royce & Associates. In terms of the portfolio weights assigned to each position Lynrock Lake allocated the biggest weight to Veeco Instruments Inc. (NASDAQ:VECO), around 15.88% of its 13F portfolio. Nishkama Capital is also relatively very bullish on the stock, setting aside 0.67 percent of its 13F equity portfolio to VECO.
Now, some big names have jumped into Veeco Instruments Inc. (NASDAQ:VECO) headfirst. Intrinsic Edge Capital, managed by Mark Coe, created the most outsized position in Veeco Instruments Inc. (NASDAQ:VECO). Intrinsic Edge Capital had $2.3 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also made a $1.4 million investment in the stock during the quarter. The following funds were also among the new VECO investors: Peter Muller's PDT Partners, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Minhua Zhang's Weld Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Veeco Instruments Inc. (NASDAQ:VECO) but similarly valued. We will take a look at Laredo Petroleum Inc (NYSE:LPI), First Defiance Financial Corp. (NASDAQ:FDEF), Caesarstone Ltd. (NASDAQ:CSTE), and City Office REIT Inc (NYSE:CIO). All of these stocks' market caps resemble VECO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPI,15,129842,1 FDEF,9,40050,0 CSTE,9,27696,0 CIO,11,73563,5 Average,11,67788,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $183 million in VECO's case. Laredo Petroleum Inc (NYSE:LPI) is the most popular stock in this table. On the other hand First Defiance Financial Corp. (NASDAQ:FDEF) is the least popular one with only 9 bullish hedge fund positions. Veeco Instruments Inc. (NASDAQ:VECO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on VECO as the stock returned 17.2% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.