We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2019. In this article we are going to take a look at smart money sentiment towards Visteon Corp (NYSE:VC).
Visteon Corp (NYSE:VC) investors should pay attention to an increase in hedge fund sentiment of late. Our calculations also showed that VC isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you'd ask most market participants, hedge funds are viewed as unimportant, old investment tools of years past. While there are more than 8000 funds trading at present, Our researchers hone in on the aristocrats of this group, around 850 funds. These hedge fund managers watch over the majority of all hedge funds' total capital, and by paying attention to their inimitable picks, Insider Monkey has identified several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_26340" align="aligncenter" width="400"] Ken Griffin of Citadel Investment Group[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. With all of this in mind we're going to take a peek at the latest hedge fund action encompassing Visteon Corp (NYSE:VC).
What does smart money think about Visteon Corp (NYSE:VC)?
At Q4's end, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from the previous quarter. The graph below displays the number of hedge funds with bullish position in VC over the last 18 quarters. With hedgies' capital changing hands, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Visteon Corp (NYSE:VC) was held by Iridian Asset Management, which reported holding $101.5 million worth of stock at the end of September. It was followed by Trigran Investments with a $39 million position. Other investors bullish on the company included Private Capital Management, Citadel Investment Group, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Trigran Investments allocated the biggest weight to Visteon Corp (NYSE:VC), around 7% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, earmarking 3.52 percent of its 13F equity portfolio to VC.
Consequently, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Visteon Corp (NYSE:VC). Arrowstreet Capital had $16.4 million invested in the company at the end of the quarter. Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management also initiated a $6 million position during the quarter. The following funds were also among the new VC investors: Jack Woodruff's Candlestick Capital Management, Noam Gottesman's GLG Partners, and Joel Greenblatt's Gotham Asset Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Visteon Corp (NYSE:VC) but similarly valued. These stocks are Chart Industries, Inc. (NASDAQ:GTLS), Newmark Group, Inc. (NASDAQ:NMRK), SVMK Inc. (NASDAQ:SVMK), and ArQule, Inc. (NASDAQ:ARQL). This group of stocks' market caps resemble VC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GTLS,19,268582,-4 NMRK,23,157189,1 SVMK,31,302485,5 ARQL,46,966954,22 Average,29.75,423803,6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $424 million. That figure was $277 million in VC's case. ArQule, Inc. (NASDAQ:ARQL) is the most popular stock in this table. On the other hand Chart Industries, Inc. (NASDAQ:GTLS) is the least popular one with only 19 bullish hedge fund positions. Visteon Corp (NYSE:VC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately VC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); VC investors were disappointed as the stock returned -41.7% during the same time period 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 most of these stocks already outperformed the market in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
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