In this article we will take a look at whether hedge funds think Vector Group Ltd (NYSE:VGR) is 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, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is VGR a good stock to buy now? Vector Group Ltd (NYSE:VGR) investors should pay attention to a decrease in support from the world's most elite money managers in recent months. Vector Group Ltd (NYSE:VGR) was in 17 hedge funds' portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that VGR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Minhua Zhang of Weld Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we're going to go over the key hedge fund action regarding Vector Group Ltd (NYSE:VGR).
Do Hedge Funds Think VGR Is A Good Stock To Buy Now?
At Q3's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VGR over the last 21 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Vector Group Ltd (NYSE:VGR), with a stake worth $95.6 million reported as of the end of September. Trailing Renaissance Technologies was GLG Partners, which amassed a stake valued at $14.2 million. Orbis Investment Management, Intrinsic Edge Capital, and Winton Capital Management 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 Intrinsic Edge Capital allocated the biggest weight to Vector Group Ltd (NYSE:VGR), around 0.45% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, designating 0.14 percent of its 13F equity portfolio to VGR.
Seeing as Vector Group Ltd (NYSE:VGR) has faced falling interest from the smart money, we can see that there is a sect of fund managers who were dropping their full holdings in the third quarter. At the top of the heap, Jonathan Soros's JS Capital dropped the biggest position of the "upper crust" of funds watched by Insider Monkey, comprising about $0.4 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund sold off about $0.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Vector Group Ltd (NYSE:VGR) but similarly valued. These stocks are Otter Tail Corporation (NASDAQ:OTTR), Cortexyme, Inc. (NASDAQ:CRTX), Yelp Inc (NYSE:YELP), United Community Banks Inc (NASDAQ:UCBI), WestAmerica Bancorp. (NASDAQ:WABC), Nova Measuring Instruments Ltd. (NASDAQ:NVMI), and MicroStrategy Incorporated (NASDAQ:MSTR). All of these stocks' market caps resemble VGR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OTTR,10,58248,-2 CRTX,7,21069,1 YELP,27,374901,0 UCBI,13,38908,-4 WABC,12,23440,0 NVMI,11,212026,-2 MSTR,20,87203,-6 Average,14.3,116542,-1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $132 million in VGR's case. Yelp Inc (NYSE:YELP) is the most popular stock in this table. On the other hand Cortexyme, Inc. (NASDAQ:CRTX) is the least popular one with only 7 bullish hedge fund positions. Vector Group Ltd (NYSE:VGR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VGR is 52.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on VGR as the stock returned 31.8% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.