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NiSource Inc. (NI): Are Hedge Funds Right About This Stock?

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Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

NiSource Inc. (NYSE:NI) was in 23 hedge funds’ portfolios at the end of September. NI has experienced an increase in support from the world’s most elite money managers of late. There were 18 hedge funds in our database with NI positions at the end of the previous quarter. At the end of this article we will also compare NI to other stocks including Sunoco Logistics Partners L.P. (NYSE:SXL), Cna Financial Corp (NYSE:CNA), and Alleghany Corporation (NYSE:Y) to get a better sense of its popularity.

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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.

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How have hedgies been trading NiSource Inc. (NYSE:NI)?

Heading into the fourth quarter of 2016, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a jump of 28% from the second quarter of 2016, though there are still fewer hedgies long the stock than there were on March 31. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
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According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, run by Israel Englander, holds the most valuable position in NiSource Inc. (NYSE:NI). According to regulatory filings, the fund has a $146 million position in the stock. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $111.9 million position. Remaining professional money managers that are bullish include D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.

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