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While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Virtu Financial Inc (NASDAQ:VIRT).
Is VIRT stock a buy? Virtu Financial Inc (NASDAQ:VIRT) was in 27 hedge funds' portfolios at the end of December. The all time high for this statistic is 28. VIRT has experienced an increase in support from the world's most elite money managers in recent months. There were 26 hedge funds in our database with VIRT positions at the end of the third quarter. Our calculations also showed that VIRT isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Ian Wace of Marshall Wace
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Keeping this in mind we're going to analyze the recent hedge fund action regarding Virtu Financial Inc (NASDAQ:VIRT).
Do Hedge Funds Think VIRT Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards VIRT over the last 22 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the biggest position in Virtu Financial Inc (NASDAQ:VIRT). Renaissance Technologies has a $120.3 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $31.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers that are bullish encompass Cliff Asness's AQR Capital Management, Paul Marshall and Ian Wace's Marshall Wace LLP and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Full18 Capital allocated the biggest weight to Virtu Financial Inc (NASDAQ:VIRT), around 1.57% of its 13F portfolio. Callodine Capital Management is also relatively very bullish on the stock, earmarking 1.35 percent of its 13F equity portfolio to VIRT.
As one would reasonably expect, key money managers have jumped into Virtu Financial Inc (NASDAQ:VIRT) headfirst. Full18 Capital, managed by Allon Hellmann, established the most outsized position in Virtu Financial Inc (NASDAQ:VIRT). Full18 Capital had $3.6 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $2.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Brandon Haley's Holocene Advisors, Michael Gelband's ExodusPoint Capital, and Karim Abbadi and Edward McBride's Centiva Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Virtu Financial Inc (NASDAQ:VIRT) but similarly valued. We will take a look at Allison Transmission Holdings Inc (NYSE:ALSN), Essent Group Ltd (NYSE:ESNT), Pacific Biosciences of California, Inc. (NASDAQ:PACB), LiveRamp Holdings, Inc. (NYSE:RAMP), IDACORP Inc (NYSE:IDA), NCR Corporation (NYSE:NCR), and SailPoint Technologies Holdings, Inc. (NYSE:SAIL). All of these stocks' market caps are similar to VIRT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALSN,25,609196,-5 ESNT,32,296283,10 PACB,23,1483936,-2 RAMP,24,257256,-4 IDA,14,167230,-17 NCR,32,483312,0 SAIL,32,1002995,3 Average,26,614315,-2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $614 million. That figure was $228 million in VIRT's case. Essent Group Ltd (NYSE:ESNT) is the most popular stock in this table. On the other hand IDACORP Inc (NYSE:IDA) is the least popular one with only 14 bullish hedge fund positions. Virtu Financial Inc (NASDAQ:VIRT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VIRT is 71. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on VIRT as the stock returned 27.7% since the end of Q4 (through 4/19) 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.