The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Verra Mobility Corporation (NASDAQ:VRRM) based on those filings.
Is VRRM a good stock to buy now? Verra Mobility Corporation (NASDAQ:VRRM) has seen a decrease in hedge fund sentiment in recent months. Verra Mobility Corporation (NASDAQ:VRRM) was in 19 hedge funds' portfolios at the end of September. The all time high for this statistic is 33. Our calculations also showed that VRRM 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.
To most market participants, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at present, We look at the crème de la crème of this group, around 850 funds. Most estimates calculate that this group of people direct the majority of all hedge funds' total asset base, and by keeping an eye on their unrivaled picks, Insider Monkey has unsheathed various investment strategies that have historically defeated the market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Gavin Saitowitz of Prelude Capital
Gavin Saitowitz of Prelude Capital
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 let's review the new hedge fund action encompassing Verra Mobility Corporation (NASDAQ:VRRM).
Do Hedge Funds Think VRRM Is A Good Stock To Buy Now?
At third quarter's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards VRRM over the last 21 quarters. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Scopia Capital held the most valuable stake in Verra Mobility Corporation (NASDAQ:VRRM), which was worth $67.9 million at the end of the third quarter. On the second spot was Tremblant Capital which amassed $55 million worth of shares. Crescent Park Management, HG Vora Capital Management, and Sirios 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 Scopia Capital allocated the biggest weight to Verra Mobility Corporation (NASDAQ:VRRM), around 8.03% of its 13F portfolio. Crescent Park Management is also relatively very bullish on the stock, designating 3.46 percent of its 13F equity portfolio to VRRM.
Because Verra Mobility Corporation (NASDAQ:VRRM) has faced declining sentiment from hedge fund managers, we can see that there exists a select few money managers who were dropping their full holdings last quarter. Intriguingly, Jeffrey Ubben's ValueAct Capital sold off the largest position of the 750 funds monitored by Insider Monkey, valued at close to $60.7 million in stock. John R. Wagner's fund, SCW Capital Management, also dropped its stock, about $11.8 million worth. These moves are important to note, as total hedge fund interest dropped by 6 funds last quarter.
Let's go over hedge fund activity in other stocks similar to Verra Mobility Corporation (NASDAQ:VRRM). We will take a look at Cardiovascular Systems Inc (NASDAQ:CSII), BioTelemetry, Inc. (NASDAQ:BEAT), Rambus Inc. (NASDAQ:RMBS), Innospec Inc. (NASDAQ:IOSP), USANA Health Sciences, Inc. (NYSE:USNA), Baozun Inc (NASDAQ:BZUN), and SeaWorld Entertainment Inc (NYSE:SEAS). This group of stocks' market caps resemble VRRM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSII,22,155492,2 BEAT,17,88893,1 RMBS,19,167579,1 IOSP,21,74483,3 USNA,18,202824,-1 BZUN,21,72825,6 SEAS,32,797374,5 Average,21.4,222781,2.4 [/table]
As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $223 million. That figure was $221 million in VRRM's case. SeaWorld Entertainment Inc (NYSE:SEAS) is the most popular stock in this table. On the other hand BioTelemetry, Inc. (NASDAQ:BEAT) is the least popular one with only 17 bullish hedge fund positions. Verra Mobility Corporation (NASDAQ:VRRM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VRRM is 22.9. 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 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. A small number of hedge funds were also right about betting on VRRM as the stock returned 38.3% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Get real-time email alerts: Follow Verra Mobility Corp (NASDAQ:VRRM)
Disclosure: None. This article was originally published at Insider Monkey.
