With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Veeva Systems Inc (NYSE:VEEV).
Is Veeva Systems Inc (NYSE:VEEV) going to take off soon? The best stock pickers are taking a bearish view. The number of bullish hedge fund bets decreased by 2 lately. Our calculations also showed that VEEV isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). VEEV was in 33 hedge funds' portfolios at the end of September. There were 35 hedge funds in our database with VEEV holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_365194" align="aligncenter" width="600"] David E. Shaw of D.E. Shaw[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to view the fresh hedge fund action encompassing Veeva Systems Inc (NYSE:VEEV).
How are hedge funds trading Veeva Systems Inc (NYSE:VEEV)?
Heading into the fourth quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VEEV over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Veeva Systems Inc (NYSE:VEEV) was held by Two Sigma Advisors, which reported holding $215.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $198.7 million position. Other investors bullish on the company included Arrowstreet Capital, D E Shaw, and GLG Partners. In terms of the portfolio weights assigned to each position Navellier & Associates allocated the biggest weight to Veeva Systems Inc (NYSE:VEEV), around 2.51% of its portfolio. Ratan Capital Group is also relatively very bullish on the stock, earmarking 2.05 percent of its 13F equity portfolio to VEEV.
Due to the fact that Veeva Systems Inc (NYSE:VEEV) has witnessed falling interest from the smart money, logic holds that there was a specific group of fund managers who sold off their full holdings by the end of the third quarter. Interestingly, Gabriel Plotkin's Melvin Capital Management dumped the largest position of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $97.3 million in stock. Larry Chen and Terry Zhang's fund, Tairen Capital, also dumped its stock, about $4.1 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Veeva Systems Inc (NYSE:VEEV) but similarly valued. These stocks are American Water Works Company, Inc. (NYSE:AWK), Aptiv PLC (NYSE:APTV), Verisign, Inc. (NASDAQ:VRSN), and Corning Incorporated (NYSE:GLW). This group of stocks' market valuations are closest to VEEV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AWK,35,652077,12 APTV,27,887545,1 VRSN,30,5568484,-2 GLW,27,203363,1 Average,29.75,1827867,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $1828 million. That figure was $1020 million in VEEV's case. American Water Works Company, Inc. (NYSE:AWK) is the most popular stock in this table. On the other hand Aptiv PLC (NYSE:APTV) is the least popular one with only 27 bullish hedge fund positions. Veeva Systems Inc (NYSE:VEEV) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately VEEV wasn't nearly as popular as these 20 stocks and hedge funds that were betting on VEEV were disappointed as the stock returned -2.3% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.