After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Viavi Solutions Inc (NASDAQ:VIAV).
Is VIAV stock a buy? Viavi Solutions Inc (NASDAQ:VIAV) was in 27 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 37. VIAV has seen a decrease in activity from the world's largest hedge funds recently. There were 29 hedge funds in our database with VIAV positions at the end of the third quarter. Our calculations also showed that VIAV isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 we're going to take a gander at the latest hedge fund action regarding Viavi Solutions Inc (NASDAQ:VIAV).
Do Hedge Funds Think VIAV Is A Good Stock To Buy Now?
At the end of December, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the third quarter of 2020. By comparison, 37 hedge funds held shares or bullish call options in VIAV a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Viavi Solutions Inc (NASDAQ:VIAV) was held by Arrowstreet Capital, which reported holding $62.1 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $38.7 million position. Other investors bullish on the company included Citadel Investment Group, Adage Capital Management, and Woodline Partners. In terms of the portfolio weights assigned to each position Boardman Bay Capital Management allocated the biggest weight to Viavi Solutions Inc (NASDAQ:VIAV), around 3.36% of its 13F portfolio. KCL Capital is also relatively very bullish on the stock, setting aside 1.31 percent of its 13F equity portfolio to VIAV.
Because Viavi Solutions Inc (NASDAQ:VIAV) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers who were dropping their positions entirely in the fourth quarter. It's worth mentioning that Anand Parekh's Alyeska Investment Group dumped the biggest stake of the "upper crust" of funds tracked by Insider Monkey, comprising an estimated $21.9 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund said goodbye to about $15.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds in the fourth quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Viavi Solutions Inc (NASDAQ:VIAV) but similarly valued. These stocks are New Jersey Resources Corp (NYSE:NJR), PagerDuty, Inc. (NYSE:PD), Vir Biotechnology, Inc. (NASDAQ:VIR), TTEC Holdings, Inc. (NASDAQ:TTEC), Spectrum Brands Holdings, Inc. (NYSE:SPB), UFP Industries, Inc. (NASDAQ:UFPI), and BRF SA (NYSE:BRFS). This group of stocks' market caps match VIAV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NJR,13,36022,1 PD,26,731148,-2 VIR,5,4926,-1 TTEC,10,50847,-4 SPB,35,598686,-3 UFPI,19,118699,-1 BRFS,11,23525,1 Average,17,223408,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $223 million. That figure was $298 million in VIAV's case. Spectrum Brands Holdings, Inc. (NYSE:SPB) is the most popular stock in this table. On the other hand Vir Biotechnology, Inc. (NASDAQ:VIR) is the least popular one with only 5 bullish hedge fund positions. Viavi Solutions Inc (NASDAQ:VIAV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VIAV is 61.6. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately VIAV wasn't nearly as popular as these 30 stocks and hedge funds that were betting on VIAV were disappointed as the stock returned 10.9% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.