Verition Fund Management Portfolio: A Deep Dive into a Diversified $10.47 Billion Hedge Fund

HFA Padded
HFA Articles
Published on
Updated on
Verition Fund Management Portfolio

Verition is a multi-strategy hedge fund with an AUM of $10.47 billion. In its strategy arsenal are event-driven, fixed-income, macro, and equity long and short strategies. The fund was founded in 2008 by Nicholas Maounis and Josh Goldstein. The Verition Fund Management Portfolio encompasses 2,745 positions with 2,131 holdings and 614 options.

The largest holding by far is SPDR S&P 500 ETF Trust (NYSEARCA:SPY), while in second place is Nvidia (NASDAQ:NVDA). Among other holdings, which are all below 1% of the portfolio, are Berkshire Hathaway Inc. Class B (NYSE:BRK.B), Amazon Inc. (NASDAQ:AMZN), and Microsoft Corp. (NASDAQ:MSFT).

Verition’s $10.47 billion portfolio is not only diversified among holdings but also across sectors. The finance sector is their favorite pick, with just over 15% of the portfolio, which can show just how diverse their approach to investing is.

They had a busy last quarter, with major increases being in the Berkshire Hathaway and Xcel Energy holdings, while noted reductions include SPY, Nvidia, Amazon, and Microsoft. Besides their stock holdings, Verition also has significant option holdings in their portfolio, which we will go through in the article.

Key Takeaways

  • Verition Fund Management LLC was founded in 2008 by Nicholas Maounais and Josh Goldstein.
  • The fund, besides its New York and Connecticut offices, has bases in London, Dubai, Hong Kong, and Singapore.
  • Verition is a multi-manager and multi-strategy fund that allows their portfolio managers to be creative and do what they do best.
  • Their highly diversified portfolio has an AUM of $10.47 billion, while the largest holdings are SPY, Nvidia, and Berkshire Hathaway Class B.

Key Holdings

SPDR S&P 500 ETF Trust (NYSEARCA:SPY) with 6.06% of the portfolio

The fund held a record amount of 2.67 million SPY stocks during Q4 2023, significantly reducing the number to 1.21 million in Q1 2024. Currently, there are 1.2 million stocks in the holding, which is valued at $634.30 million. On average, the fund paid SPY stocks $448, while the ongoing price is 16% higher.

Nvidia Corporation (NASDAQ:NVDA) with 3.24% of the portfolio

Nvidia, one of the drivers of the AI boom, is another Verition favorite. In Q4 2023, they owned 666 thousand stocks, trimming their number to 375 thousand in the next quarter. While Nvidia is making new records every day, reaching a value of $946, the biggest question is where and when this trend will end up. Verition has been paying Nvidia stocks $450 on average, while the present price is 110% higher.

Berkshire Hathaway Inc Class B (NYSE:BRK.B) with 0.80% of the portfolio

Class B stocks of the Warren Buffett managed fund are the all-star investment for the start of 2024. The fund raised from 27 thousand stocks in 2023 to 199 thousand at the beginning of 2024, for a total value of $83.70 million. It will take some time for the investment to deliver significant gains. However, the stock price has already increased by 8% from the average buying price.

Amazon Com (NASDAQ:AMZN) with 0.66% of the portfolio

Amazon held a larger weight in 2023 with 825 thousand shares, while they entered 2024 with 382 thousand. While Verition has been paying $140 per share on average, the current price is 33% higher. The value of the holding is $68.94 million.

Microsoft Corp (NASDAQ:MSFT) with 0.64% of the portfolio

Like with other stocks from the Magnificent Seven group, Microsoft Holding also started 2024 with a significant trimming. Verition held 406 thousand stocks in 2023 and decided to sell 60% of the holding. That left them with 160 thousand stocks with a value of $67.30 million. The present-day Microsoft stock price is $423, which is 26% higher than the average buying price.

Xcel Energy Inc. (NASDAQ:XEL) with 0.63% of the portfolio

While Verition has been trimming tech holdings, they significantly increased their Xcel Energy one. The company is in the utilities sector, and it provides electric and natural gas supplies to their customers. At the beginning of 2024, Verition bought 1.07 million stocks at $57.80, and in the meantime, the price slightly dropped to $55.8. The value of the holding is $65.80 million.

First Horizon Corp (NYSE:FHN) with 0.62% of the portfolio

The Verition initial investment in FHN was in Q2 2023, with a buyback of 3.36 million shares. They continued to increase their position and raised ownership to 4.21 million shares. Holding is valued at $64.83 million. After a year, the holding is already delivering solid gains, with an increase in price of almost 14% in comparison to an average buying price.

Old National Bancorp (NASDAQ:ONB) with 0.62% of the portfolio

After First Horizon, Old National is another pick from the financial sector. They are a long-time favorite since the fund has kept a solid stake in the company for years. Their position is at 3.71 million stocks and is valued at $64.57 million. During the decade, the average buying price was $16, while it is currently at $17.50. (NYSE:CRM) with 0.60% of the portfolio

Salesforce has seen an explosion in value since last November. Verition owns 207 thousand shares, while 202 thousand were bought in 2024. Their purchase may come a bit late since the price has already reached $280. Since then, the price has grown a bit to $287. The value of the holding is $62.37 million.

NiSource Inc (NYSE:NI) with 0.58% of the portfolio

NiSource is another utility company in the top 10 with a holding valued at $60.76 million. Verition increased its position alongside Xcel in the same sector. In Q1 2024, they added 1.81 million shares to the 385 thousand shares already owned. Since the acquisition, the price has risen from $27 to $29.

Sector Allocation

Verition Fund Management has a very diversified portfolio, both geographically and sectorally. Their position-sizing and sector-factoring are organized to minimize exposure to various market risks. The current sector allocation is:

  • Financials, with 10.23% of the portfolio valued at $1.07 billion
  • Technology, with 9.91% of the portfolio valued at $1.03 billion
  • Consumer Cyclical, with 8.56% of the portfolio valued at $896 million
  • Industrials, with 6.70% of the portfolio valued at $701 million
  • Utilities with 5.78% of the portfolio valued at $605 million
  • Consumer Defensive, with 4.79% of the portfolio valued at $501 million
  • Healthcare, with 4.45% of the portfolio valued at $465 million
  • Real estate, with 3.89% of the portfolio valued at $407 million
  • Energy, with 2.80% of the portfolio valued at $293 million
  • Telecommunications, with 2.65% of the portfolio valued at $277 million
  • Materials with 2.28% of the portfolio valued at $238 million
  • Verition Fund Investment Strategy

Besides stock holdings, Verition Fund Management heavily employs option holdings.

The top 3 pull options include:

  • SPDR S&P 500 ETF Trust (NYSEARCA:SPY) with 1.44 million stocks
  • Nvidia Corp. (NASDAQ:NVDA) has 326 thousand stocks
  • iShares Russell 2000 ETF (NYSEARCA:IWM) with 450 thousand stocks

The top 3 call options include:

  • iShares iBoxx $ Inv Grade Corporate Bond ETF (NYSEARCA: LQD) with 1.60 million shares
  • iShares 7-10 Year Treasury Bond ETF (NASDAQ:IEF) with 1 million stocks
  • Apple Inc. (NASDAQ:AAPL) has 322 thousand stocks

Verition Fund Management LLC is a multi-manager and multi-strategy hedge fund founded in 2008. They are not limiting themselves to a specific strategy or niche and are allowing their portfolio managers enough breathing space to showcase their craftsmanship.

Depending on the fund and the manager, clients can choose between investing in fixed income, credit, event-driven situations, equity long/short, or capital markets trading.

The fund is in the expansion process, hiring left and right during 2023 and 2024. They picked up some major talent, including Shin Kobayashi, a former Citigroup employee, and Hao Long, formerly a head in Citadel’s Surveyor Capital unit.

The fund expanded their operations by opening offices in Hong Kong, Singapore, Dubai, and London. This reflects their commitment to the global market and their diversification not only along industry sectors but also among different continents.

One of the cornerstones of their overall approach is internal investing. This helps in aligning the goals of the outside investors with those of the investors within the fund.

Verition Fund Portfolio Performance Analysis

Historical Performance

Between the inception of the fund in 2008 and 2022, the fund generated cumulative returns of 565% in comparison to the S&P 500 and its return of 262%.

In the last three years, the performance of the top 20 holdings has dropped. They managed to generate a cumulative negative return of 0.72%, while the situation in the top 50 holdings is a bit better. Since they have a very diversified portfolio, looking at a larger pool of holdings is crucial. The top 50 holdings delivered 9.24% returns in the last three years.

Notable Success

  • Nvidia Corporation Holding Nvidia has been a golden goose for many investors if they managed to time their trades properly. Versions generated significant gains since their average buying price is 110% lower than the present one.