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Where Do Hedge Funds Stand On Varonis Systems Inc (VRNS)?

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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Varonis Systems Inc (NASDAQ:VRNS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Varonis Systems Inc (NASDAQ:VRNS) has experienced an increase in hedge fund sentiment lately. Varonis Systems Inc (NASDAQ:VRNS) was in 32 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that VRNS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Today there are numerous gauges market participants put to use to evaluate their stock investments. Two of the most under-the-radar gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top investment managers can beat their index-focused peers by a very impressive 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 .

Donald Sussman Paloma Partners
Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 look at the key hedge fund action regarding Varonis Systems Inc (NASDAQ:VRNS).

Do Hedge Funds Think VRNS Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the fourth quarter of 2020. By comparison, 20 hedge funds held shares or bullish call options in VRNS a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Tremblant Capital was the largest shareholder of Varonis Systems Inc (NASDAQ:VRNS), with a stake worth $74.2 million reported as of the end of March. Trailing Tremblant Capital was Matrix Capital Management, which amassed a stake valued at $64 million. Two Sigma Advisors, Renaissance Technologies, and Arrowstreet 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 One01 Capital allocated the biggest weight to Varonis Systems Inc (NASDAQ:VRNS), around 8.58% of its 13F portfolio. Andar Capital is also relatively very bullish on the stock, earmarking 7.17 percent of its 13F equity portfolio to VRNS.

As industrywide interest jumped, some big names were leading the bulls' herd. Matrix Capital Management, managed by David Goel and Paul Ferri, created the most outsized position in Varonis Systems Inc (NASDAQ:VRNS). Matrix Capital Management had $64 million invested in the company at the end of the quarter. Panayotis Takis Sparaggis's Alkeon Capital Management also initiated a $2.3 million position during the quarter. The other funds with brand new VRNS positions are Peter Muller's PDT Partners, Donald Sussman's Paloma Partners, and Matthew Hulsizer's PEAK6 Capital Management.

Let's now review hedge fund activity in other stocks similar to Varonis Systems Inc (NASDAQ:VRNS). We will take a look at Travel + Leisure Co. (NYSE:TNL), Shell Midstream Partners LP (NYSE:SHLX), Daqo New Energy Corp (NYSE:DQ), The Howard Hughes Corporation (NYSE:HHC), Herbalife Nutrition Ltd. (NYSE:HLF), Bank OZK (NASDAQ:OZK), and Kemper Corporation (NYSE:KMPR). All of these stocks' market caps are similar to VRNS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TNL,30,745794,1 SHLX,4,27451,-3 DQ,17,129832,-1 HHC,27,1619423,0 HLF,40,1994608,-1 OZK,25,237162,5 KMPR,11,43239,-2 Average,22,685358,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $685 million. That figure was $382 million in VRNS's case. Herbalife Nutrition Ltd. (NYSE:HLF) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 4 bullish hedge fund positions. Varonis Systems Inc (NASDAQ:VRNS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VRNS is 75.9. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on VRNS, though not to the same extent, as the stock returned 14.6% since Q1 (through July 2nd) and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.