Hedge Funds Are Fleeing Nordson Corporation (NDSN): What Did They Find Out?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Nordson Corporation (NASDAQ:NDSN).

Is Nordson Corporation (NASDAQ:NDSN) a healthy stock for your portfolio? Money managers are getting less bullish. The number of long hedge fund bets that are revealed through the 13F filings slashed by 8 lately. NDSN was in 14 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with NDSN positions at the end of the previous quarter. At the end of this article we will also compare NDSN to other stocks including Live Nation Entertainment, Inc. (NYSE:LYV), Banco Bradesco SA (ADR) (NYSE:BBD), and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading Nordson Corporation (NASDAQ:NDSN)?

Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a 36% tumble from the second quarter of 2016. By comparison, 12 hedge funds held shares or bullish call options in NDSN heading into this year, so ownership is still up for the year after nearly doubling in the first half of the year. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the biggest position in Nordson Corporation (NASDAQ:NDSN). Royce & Associates has a $44.2 million position in the stock. The second largest stake is held by Millennium Management, founded by Israel Englander, which holds a $13.9 million position. Remaining members of the smart money that hold long positions comprise Jim Simons’ Renaissance Technologies, Mario Gabelli’s GAMCO Investors, and Roger Ibbotson’s Zebra Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Since Nordson Corporation (NASDAQ:NDSN) has weathered falling interest from the aggregate hedge fund industry, logic holds that there were a few funds that slashed their positions entirely in the third quarter. At the top of the heap, Ernest Chow and Jonathan Howe’s Sensato Capital Management cut the biggest position of the 700 funds followed by Insider Monkey, comprising about $10.1 million in stock, and George Hall’s Clinton Group was right behind this move, as the fund dropped about $1.6 million worth of shares.

Let’s check out hedge fund activity in other stocks similar to Nordson Corporation (NASDAQ:NDSN). We will take a look at Live Nation Entertainment, Inc. (NYSE:LYV), Banco Bradesco SA (ADR) (NYSE:BBD), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), and Envision Healthcare Holdings Inc (NYSE:EVHC). This group of stocks’ market valuations match NDSN’s market valuation.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $483 million. That figure was $82 million in NDSN’s case. Envision Healthcare Holdings Inc (NYSE:EVHC) is the most popular stock in this table. On the other hand Banco Bradesco SA (ADR) (NYSE:BBD) is the least popular one with only 13 bullish hedge fund positions. Nordson Corporation (NASDAQ:NDSN) 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. In this regard EVHC might be a better candidate to consider taking a long position in.

Disclosure: None