Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like National Instruments Corp (NASDAQ:NATI).
Is National Instruments Corp (NASDAQ:NATI) a sound investment today? Investors who are in the know are becoming more confident. The number of long hedge fund bets advanced by 2 lately. 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 PrivateBancorp Inc (NASDAQ:PVTB), ViaSat, Inc. (NASDAQ:VSAT), and HEALTHSOUTH Corp. (NYSE:HLS) to gather more data points.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
Keeping this in mind, we’re going to check out the fresh action regarding National Instruments Corp (NASDAQ:NATI).
What have hedge funds been doing with National Instruments Corp (NASDAQ:NATI)?
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 9% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, David Blood and Al Gore’s Generation Investment Management has the biggest position in National Instruments Corp (NASDAQ:NATI), worth close to $109.1 million, corresponding to 1.2% of its total 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which holds a $94.3 million position; 0.6% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism consist of Brian Bares’s Bares Capital Management, Jim Simons’s Renaissance Technologies and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Stevens Capital Management, managed by Matthew Tewksbury, assembled the largest position in National Instruments Corp (NASDAQ:NATI). The fund reportedly had $0.4 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.3 million investment in the stock during the quarter. The other funds with brand new NATI positions are Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies, and Daniel Arbess’s Perella Weinberg Partners.
Let’s check out hedge fund activity in other stocks similar to National Instruments Corp (NASDAQ:NATI). We will take a look at PrivateBancorp Inc (NASDAQ:PVTB), ViaSat, Inc. (NASDAQ:VSAT), HEALTHSOUTH Corp. (NYSE:HLS), and Leidos Holdings Inc (NYSE:LDOS). This group of stocks’ market caps match NATI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $904 million. That figure was a minor $373 million in NATI’s case. Leidos Holdings Inc (NYSE:LDOS) is the most popular stock in this table. On the other hand ViaSat, Inc. (NASDAQ:VSAT) is the least popular one with only 21 bullish hedge fund positions. National Instruments Corp (NASDAQ:NATI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LDOS might be a better candidate to consider a long position.