We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Vishay Precision Group Inc (NYSE:VPG).
Is Vishay Precision Group Inc (NYSE:VPG) a great stock to buy now? The best stock pickers are in an optimistic mood. The number of long hedge fund positions went up by 1 lately. Our calculations also showed that VPG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). VPG was in 15 hedge funds' portfolios at the end of the third quarter of 2019. There were 14 hedge funds in our database with VPG positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let's take a look at the latest hedge fund action regarding Vishay Precision Group Inc (NYSE:VPG).
How are hedge funds trading Vishay Precision Group Inc (NYSE:VPG)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VPG over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Nokomis Capital, managed by Brett Hendrickson, holds the largest position in Vishay Precision Group Inc (NYSE:VPG). Nokomis Capital has a $63.6 million position in the stock, comprising 13.8% of its 13F portfolio. Coming in second is Renaissance Technologies, founded by Jim Simons, holding a $26.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism consist of Chuck Royce's Royce & Associates, Jeffrey Moskowitz's Harvey Partners and David E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Nokomis Capital allocated the biggest weight to Vishay Precision Group Inc (NYSE:VPG), around 13.75% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, dishing out 10.3 percent of its 13F equity portfolio to VPG.
As aggregate interest increased, some big names were leading the bulls' herd. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, established the most outsized position in Vishay Precision Group Inc (NYSE:VPG). Algert Coldiron Investors had $0.2 million invested in the company at the end of the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Vishay Precision Group Inc (NYSE:VPG) but similarly valued. We will take a look at Sentinel Energy Services Inc. (NASDAQ:STNL), Franklin Financial Network Inc (NYSE:FSB), The Manitowoc Company, Inc. (NYSE:MTW), and Cellectis SA (NASDAQ:CLLS). All of these stocks' market caps are similar to VPG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STNL,15,122821,0 FSB,3,14351,-1 MTW,15,80014,2 CLLS,8,20654,-3 Average,10.25,59460,-0.5 [/table]
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $138 million in VPG's case. Sentinel Energy Services Inc. (NASDAQ:STNL) is the most popular stock in this table. On the other hand Franklin Financial Network Inc (NYSE:FSB) is the least popular one with only 3 bullish hedge fund positions. Vishay Precision Group Inc (NYSE:VPG) 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 VPG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on VPG were disappointed as the stock returned 5.1% 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.
