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Do Hedge Funds Love Northwest Natural Holding Company (NWN)?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Northwest Natural Holding Company (NYSE:NWN) based on that data.

Northwest Natural Holding Company (NYSE:NWN) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 17 hedge funds’ portfolios at the end of the first quarter of 2020. 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 ASGN Incorporated (NYSE:ASGN), Evercore Inc. (NYSE:EVR), and Triton International Limited (NYSE:TRTN) to gather more data points. Our calculations also showed that NWN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

FISHER ASSET MANAGEMENT

Ken Fisher of Fisher Asset Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the fresh hedge fund action regarding Northwest Natural Holding Company (NYSE:NWN).

Hedge fund activity in Northwest Natural Holding Company (NYSE:NWN)

At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in NWN a year ago. 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 Northwest Natural Holding Company (NYSE:NWN) was held by Renaissance Technologies, which reported holding $19.5 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $11 million position. Other investors bullish on the company included Winton Capital Management, Millennium Management, and Engineers Gate Manager. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Northwest Natural Holding Company (NYSE:NWN), around 0.21% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.2 percent of its 13F equity portfolio to NWN.

Judging by the fact that Northwest Natural Holding Company (NYSE:NWN) has faced bearish sentiment from hedge fund managers, it’s easy to see that there were a few hedge funds who sold off their positions entirely last quarter. Intriguingly, Donald Sussman’s Paloma Partners sold off the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at about $8.4 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also cut its stock, about $0.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to Northwest Natural Holding Company (NYSE:NWN). These stocks are ASGN Incorporated (NYSE:ASGN), Evercore Inc. (NYSE:EVR), Triton International Limited (NYSE:TRTN), and Karuna Therapeutics, Inc. (NASDAQ:KRTX). This group of stocks’ market valuations resemble NWN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ASGN 19 43700 1
EVR 29 198051 -3
TRTN 12 26482 -4
KRTX 16 148161 1
Average 19 104099 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $60 million in NWN’s case. Evercore Inc. (NYSE:EVR) is the most popular stock in this table. On the other hand Triton International Limited (NYSE:TRTN) is the least popular one with only 12 bullish hedge fund positions. Northwest Natural Holding Company (NYSE:NWN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately NWN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); NWN investors were disappointed as the stock returned -8.9% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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