Is Nestle SA Reg Shs. Ser. B Spons (ADR) (NSRGY) A Good Stock To Buy?

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY).

Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY) investors should be aware of a decrease in hedge fund sentiment lately. NSRGY was in 5 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with NSRGY holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as JPMorgan Chase & Co. (NYSE:JPM), Novartis AG (ADR) (NYSE:NVS), and Wal-Mart Stores, Inc. (NYSE:WMT) to gather more data points.

To most investors, hedge funds are seen as slow, outdated investment tools of yesteryear. While there are over 8000 funds in operation at the moment, Our experts hone in on the top tier of this group, about 700 funds. These money managers direct most of the smart money’s total capital, and by watching their matchless equity investments, Insider Monkey has brought to light a number of investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, let’s go over the recent action regarding Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY).

What have hedge funds been doing with Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY)?

At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Gardner Russo & Gardner, managed by Tom Russo, holds the biggest position in Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY). Gardner Russo & Gardner has a $1.1829 billion position in the stock, comprising 10.7% of its 13F portfolio. Sitting at the No. 2 spot is Ed Beddow and William Tichy’s Beddow Capital Management, with a $12 million position; 5% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish contain Tom Russo’s Gardner Russo & Gardner, Boykin Curry’s Eagle Capital Management and Ken Fisher’s Fisher Asset Management.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Bourgeon Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 700+ hedge funds tracked by Insider Monkey identified NSRGY as a viable investment and initiated a position in the stock.

Let’s now take a look at hedge fund activity in other stocks similar to Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY). These stocks are JPMorgan Chase & Co. (NYSE:JPM), Novartis AG (ADR) (NYSE:NVS), Wal-Mart Stores, Inc. (NYSE:WMT), and AT&T Inc. (NYSE:T). This group of stocks’ market valuations are closest to NSRGY’s market valuation.

As you can see these stocks had an average of 63 hedge funds with bullish positions and the average amount invested in these stocks was $4.90 billion, compared to $1.20 billion in NSRGY’s case. JPMorgan Chase & Co. (NYSE:JPM) is the most popular stock in this table, while Novartis AG (ADR) (NYSE:NVS) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Nestle SA Reg Shs. Ser. B Spons (ADR) (OTCMKTS:NSRGY) is even less popular than NVS. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to either analyze it more closely or choose a stock that enjoys more popularity among smart money investors.