Is Verb Technology Company, Inc. (VERB) A Good Stock To Buy?
Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance 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 decrease in hedge fund interest in recent months. Verb Technology Company, Inc. (NASDAQ:VERB) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 5. There were 5 hedge funds in our database with VERB positions at the end of the fourth quarter. Our calculations also showed that VERB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? 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). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Sander Gerber of Hudson Bay Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's take a glance at the new hedge fund action encompassing Verb Technology Company, Inc. (NASDAQ:VERB).
Do Hedge Funds Think VERB Is A Good Stock To Buy Now?
At first quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -40% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VERB over the last 23 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the most valuable position in Verb Technology Company, Inc. (NASDAQ:VERB). Two Sigma Advisors has a $0.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Hudson Bay Capital Management, led by Sander Gerber, holding a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position Hudson Bay Capital Management allocated the biggest weight to Verb Technology Company, Inc. (NASDAQ:VERB), around 0.0008% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, setting aside 0.0003 percent of its 13F equity portfolio to VERB.
Judging by the fact that Verb Technology Company, Inc. (NASDAQ:VERB) has witnessed falling interest from the aggregate hedge fund industry, it's easy to see that there were a few money managers that elected to cut their entire stakes by the end of the first quarter. Interestingly, Renaissance Technologies sold off the biggest position of all the hedgies watched by Insider Monkey, valued at about $0.6 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund sold off about $0.1 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks similar to Verb Technology Company, Inc. (NASDAQ:VERB). We will take a look at Williams Industrial Services Group Inc. (NYSE:WLMS), Lument Finance Trust, Inc. (NYSE:LFT), CSI Compressco LP (NASDAQ:CCLP), Synacor Inc (NASDAQ:SYNC), Recro Pharma Inc (NASDAQ:REPH), Stealth BioTherapeutics Corp (NASDAQ:MITO), and Lake Shore Bancorp, Inc. (NASDAQ:LSBK). This group of stocks' market valuations resemble VERB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF 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]
View table here if you experience formatting issues.
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. That figure was $0 million in VERB's case. 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 one with only 1 bullish hedge fund positions. Verb Technology Company, Inc. (NASDAQ:VERB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VERB is 28.1. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately VERB wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); VERB investors were disappointed as the stock returned -9.3% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
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