NVIDIA Corporation (NASDAQ:NVDA) investors should be aware of a decrease in activity from the world’s largest hedge funds lately.
To the average investor, there are plenty of gauges market participants can use to track the equity markets. Some of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite fund managers can outpace the broader indices by a solid margin (see just how much).
Just as beneficial, optimistic insider trading activity is another way to break down the world of equities. Just as you’d expect, there are plenty of incentives for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Many academic studies have demonstrated the valuable potential of this method if shareholders understand what to do (learn more here).
With these “truths” under our belt, we’re going to take a look at the recent action regarding NVIDIA Corporation (NASDAQ:NVDA).
How are hedge funds trading NVIDIA Corporation (NASDAQ:NVDA)?
In preparation for this year, a total of 27 of the hedge funds we track held long positions in this stock, a change of -13% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially.
When looking at the hedgies we track, Steven Cohen’s SAC Capital Advisors had the biggest position in NVIDIA Corporation (NASDAQ:NVDA), worth close to $33.4 million, comprising 0.2% of its total 13F portfolio. On SAC Capital Advisors’s heels is AQR Capital Management, managed by Cliff Asness, which held a $24.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Martin Whitman’s Third Avenue Management and Steven Cohen’s SAC Capital Advisors.
Judging by the fact that NVIDIA Corporation (NASDAQ:NVDA) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of hedgies who were dropping their entire stakes in Q4. Interestingly, Panayotis æTakisÆ Sparaggis’s Alkeon Capital Management said goodbye to the largest investment of all the hedgies we key on, comprising close to $28.3 million in stock., and Patrik Brummer of Zenit Asset Management AB was right behind this move, as the fund dumped about $5.2 million worth. These transactions are interesting, as total hedge fund interest dropped by 4 funds in Q4.
What do corporate executives and insiders think about NVIDIA Corporation (NASDAQ:NVDA)?
Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time frame, NVIDIA Corporation (NASDAQ:NVDA) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to NVIDIA Corporation (NASDAQ:NVDA). These stocks are ARM Holdings plc (ADR) (NASDAQ:ARMH), LSI Corp (NASDAQ:LSI), Altera Corporation (NASDAQ:ALTR), Linear Technology Corporation (NASDAQ:LLTC), and Microchip Technology Inc. (NASDAQ:MCHP). All of these stocks are in the semiconductor – specialized industry and their market caps match NVDA’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|ARM Holdings plc (ADR) (NASDAQ:ARMH)||16||0||0|
|LSI Corp (NASDAQ:LSI)||26||0||2|
|Altera Corporation (NASDAQ:ALTR)||21||0||0|
|Linear Technology Corporation (NASDAQ:LLTC)||21||0||13|
|Microchip Technology Inc. (NASDAQ:MCHP)||17||0||11|
With the returns demonstrated by the aforementioned strategies, everyday investors should always monitor hedge fund and insider trading activity, and NVIDIA Corporation (NASDAQ:NVDA) is an important part of this process.
See the 7 most committed hedge funds: