Most investors believe that hedge funds and other asset managers are worthless because they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete and outperform the bull market we’ve seen over the past several years. However, hedge funds are generally partially hedged and aim to generate attractive risk-adjusted returns rather than following the ebb and flow of the equity markets in hopes that they will outperform the broader market. Our research shows that certain hedge funds have excellent stock picking skills (and we can pretty much identify these hedge funds in advance). So let’s take a look at the smart money sentiment towards Verb Technology Company, Inc. (NASDAQ:VERB).
Is VERB a good stock to buy? Verb Technology Company, Inc. (NASDAQ:VERB) has seen a decline in hedge fund interest in recent months. Verb Technology Company, Inc. (NASDAQ:VERB) was in the portfolios of 3 hedge funds at the end of March. The all-time high of this statistic is 5. Our database had 5 hedge funds with VERB positions at the end of the fourth quarter. Our calculations have also shown that VERB is not one of the The 30 most popular stocks among hedge funds (Click for the Q1 ranking).
Why do we even pay attention to the sentiment of hedge funds? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). Because of this, we believe that hedge fund sentiment is an extremely useful indicator that investors should look out for.
Sander Gerber of Hudson Bay Capital
At Insider Monkey, we search multiple sources to discover the next great investment idea. For example, an activist hedge fund wants to buy that $ 28 biotech stock for $ 50. We have therefore recommended a long position for our monthly premium newsletter subscribers. We go lists like 10. by best battery stocks to pick the next Tesla that delivers a 10x return. While we recommend positions in just a tiny fraction of the companies we analyze, we review as many stocks as possible. We read letters from hedge fund investors and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With that in mind, let’s take a look at the new hedge fund promotion Verb Technology Company, Inc. (NASDAQ:VERB).
Do hedge funds think VERB is a good stock to buy now?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long positions in this stock, a change of -40% from the previous quarter. Below is the change in hedge fund sentiment towards VERB over the past 23 quarters. As smart money positions go through their usual ups and downs, there is an “upper tier” of notable hedge fund managers who have significantly added to their holdings (or already accumulated large positions).
According to publicly available data on hedge funds and institutional investors compiled by Insider Monkey, Two Sigma consultants, led by John Overdeck and David Siegel, holds the most valuable position at Verb Technology Company, Inc. (NASDAQ: VERB). Two Sigma Advisors has a $ 0.1 million position in the stock, which is less than 0.1% of the 13F portfolio. The second largest stake is held by Hudson Bay Capital Management, led by Sander Gerber, with a position of $ 0.1 million; less than 0.1% of the 13F portfolio is allocated to the stock. In relation to the portfolio weights assigned to each position Hudson Bay Capital Management has the largest weighting in Verb Technology Company, Inc. (NASDAQ: VERB), which represents approximately 0.0008% of its 13F portfolio. Two Sigma Advisors is also relatively bullish on the stock, adding 0.0003 percent of its 13F stock portfolio to VERB.
Considering the fact that Verb Technology Company, Inc. (NASDAQ: VERB) is seeing declining interest across the hedge fund industry, it’s easy to see that there have been some money managers who have decided to sell their entire stake by the end of the Reduce year first quarter. Interesting, Renaissance technologies sold the largest position of any hedgies watched by Insider Monkey with a stock value of about $ 0.6 million, and Israel Englander’s Millennium Management were right behind that move, as the fund was worth about $ 0.1 million sold. These moves are interesting because overall interest in hedge funds had decreased by 2 funds by the end of the first quarter.
Let’s look at hedge fund activity in other stocks similar to Verb Technology Company, Inc. (NASDAQ: VERB). We will join Williams Industrial Services Group Inc. (NYSE:WLMS), Lumen Finance Trust, Inc. (NYSE:LFT), CSI Compressco LP (NASDAQ:CCLP), Synacor Inc (NASDAQ:SYNCHRONIZE) Reviving Pharmaceuticals, Inc. (NASDAQ:REPH), Stealth BioTherapeutics Corp (NASDAQ:MYTH) and Lake Shore Bancorp, Inc. (NASDAQ:LSBK). The market valuations of this group of shares are similar to the market valuation of the VERB.
[table] Ticker, number of HRs with positions, total value of HR positions (x1000), change in HR position WLMS, 2.29222.2 LFT, 5.2562.0 CCLP, 3.1210.0 SYNC, 7.10133.3 REPH, 15.22196.2 MITO, 4,3271.1 LSBK, 1,294.0 average, 5/3/9841.1.1 [/table]
See table here when formatting problems occur.
As you can see, these stocks had an average of 5.3 hedge funds with bullish positions and the average amount invested in these stocks was $ 10 million. In VERB’s case, that number was $ 0 million. Recro Pharma Inc (NASDAQ:REPH) is the most popular stock in this table. On the other hand, Lake Shore Bancorp, Inc. (NASDAQ:LSBK) is the least popular with only 1 bullish hedge fund positions. Verb Technology Company, Inc. (NASDAQ: VERB) isn’t the least popular stock in this group, but interest in hedge funds is still below average. Our hedge fund sentiment score for VERB is 28.1 overall. Stocks with a higher number of hedge fund positions relative to other stocks and relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we would rather spend our time researching stocks that are amassed by hedge funds. Our calculations have shown that Top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, outperforming the S&P 500 ETF (SPY) by 40 percentage points. These stocks rose 17.2% through June 11, 2021, again outperforming the market by 3.3 percentage points. Unfortunately, VERB wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was pretty pessimistic); VERB investors were disappointed, as the share had returned -9.3% since the end of March (until November 6th) and lagged behind the market. If you’re interested in investing in large-cap stocks with big upside potential, this is the place to go Top 5 most popular stocks among hedge funds, as most of these stocks outperformed the market as early as 2021.
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Disclosure: None. This article was originally published at Insider monkey.