Did Hedge Funds Catch A Break With Norfolk Southern Corp. (NSC)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Norfolk Southern Corp. (NYSE:NSC) and determine whether the smart money was really smart about this stock.

Norfolk Southern Corp. (NYSE:NSC) investors should pay attention to a decrease in enthusiasm from smart money of late. Norfolk Southern Corp. (NYSE:NSC) was in 46 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 58. Our calculations also showed that NSC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a peek at the fresh hedge fund action encompassing Norfolk Southern Corp. (NYSE:NSC).

Do Hedge Funds Think NSC Is A Good Stock To Buy Now?

At third quarter’s end, a total of 46 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NSC over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Norfolk Southern Corp. (NYSE:NSC) was held by Millennium Management, which reported holding $171.7 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $152.4 million position. Other investors bullish on the company included Adage Capital Management, Renaissance Technologies, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Factorial Partners allocated the biggest weight to Norfolk Southern Corp. (NYSE:NSC), around 2.95% of its 13F portfolio. Alight Capital is also relatively very bullish on the stock, earmarking 2.77 percent of its 13F equity portfolio to NSC.

Seeing as Norfolk Southern Corp. (NYSE:NSC) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there was a specific group of funds that elected to cut their full holdings heading into Q4. Intriguingly, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management dropped the biggest stake of all the hedgies monitored by Insider Monkey, worth close to $218 million in stock, and Doug Silverman and Alexander Klabin’s Senator Investment Group was right behind this move, as the fund dropped about $86.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 12 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Norfolk Southern Corp. (NYSE:NSC) but similarly valued. We will take a look at Dominion Energy Inc. (NYSE:D), America Movil SAB de CV (NYSE:AMX), NIO Inc. (NYSE:NIO), FedEx Corporation (NYSE:FDX), América Móvil, S.A.B. de C.V. (NYSE:AMOV), Northrop Grumman Corporation (NYSE:NOC), and NetEase, Inc (NASDAQ:NTES). This group of stocks’ market values match NSC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $967 million. That figure was $1049 million in NSC’s case. FedEx Corporation (NYSE:FDX) is the most popular stock in this table. On the other hand América Móvil, S.A.B. de C.V. (NYSE:AMOV) is the least popular one with only 1 bullish hedge fund positions. Norfolk Southern Corp. (NYSE:NSC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NSC is 63.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on NSC as the stock returned 14.1% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.