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Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Veeco Instruments Inc. (NASDAQ:VECO).
Is Veeco Instruments Inc. (NASDAQ:VECO) the right pick for your portfolio? Hedge funds were in an optimistic mood. The number of long hedge fund positions improved by 1 recently. Veeco Instruments Inc. (NASDAQ:VECO) was in 20 hedge funds' portfolios at the end of March. The all time high for this statistic is 22. Our calculations also showed that VECO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 19 hedge funds in our database with VECO holdings at the end of December.
In the financial world there are dozens of indicators stock market investors put to use to value their stock investments. Two of the most useful indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the S&P 500 by a significant 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 .
Joel Greenblatt of Gotham Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let's take a gander at the new hedge fund action surrounding Veeco Instruments Inc. (NASDAQ:VECO).
Do Hedge Funds Think VECO Is A Good Stock To Buy Now?
At the end of March, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in VECO 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.
More specifically, Lynrock Lake was the largest shareholder of Veeco Instruments Inc. (NASDAQ:VECO), with a stake worth $155.5 million reported as of the end of March. Trailing Lynrock Lake was Lynrock Lake, which amassed a stake valued at $108.5 million. D E Shaw, Fisher Asset Management, and Polar Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Lynrock Lake allocated the biggest weight to Veeco Instruments Inc. (NASDAQ:VECO), around 10.16% of its 13F portfolio. Lynrock Lake is also relatively very bullish on the stock, setting aside 7.09 percent of its 13F equity portfolio to VECO.
As one would reasonably expect, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in Veeco Instruments Inc. (NASDAQ:VECO). Balyasny Asset Management had $0.3 million invested in the company at the end of the quarter. Joel Greenblatt's Gotham Asset Management also made a $0.2 million investment in the stock during the quarter.
Let's go over hedge fund activity in other stocks similar to Veeco Instruments Inc. (NASDAQ:VECO). These stocks are SFL Corporation Ltd. (NYSE:SFL), Humanigen, Inc. (NASDAQ:HGEN), Eos Energy Enterprises, Inc. (NASDAQ:EOSE), Accel Entertainment, Inc. (NYSE:ACEL), PetIQ, Inc. (NASDAQ:PETQ), Inseego Corp. (NASDAQ:INSG), and The Children's Place Inc. (NASDAQ:PLCE). 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 SFL,14,25172,0 HGEN,11,220502,6 EOSE,11,24885,1 ACEL,12,177573,-2 PETQ,10,92659,1 INSG,8,21928,-8 PLCE,18,153613,-6 Average,12,102333,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $382 million in VECO's case. The Children's Place Inc. (NASDAQ:PLCE) is the most popular stock in this table. On the other hand Inseego Corp. (NASDAQ:INSG) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Veeco Instruments Inc. (NASDAQ:VECO) is more popular among hedge funds. Our overall hedge fund sentiment score for VECO is 83.3. 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. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately VECO wasn't nearly as popular as these 5 stocks and hedge funds that were betting on VECO were disappointed as the stock returned 1.5% since the end of the first quarter (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.