The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Nasdaq, Inc. (NASDAQ:NDAQ) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Nasdaq, Inc. (NASDAQ:NDAQ) has experienced a decrease in hedge fund sentiment recently. Nasdaq, Inc. (NASDAQ:NDAQ) was in 25 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 29. There were 26 hedge funds in our database with NDAQ holdings at the end of March. Our calculations also showed that NDAQ isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
In the eyes of most shareholders, hedge funds are seen as slow, outdated financial vehicles of the past. While there are greater than 8000 funds with their doors open at present, Our researchers hone in on the bigwigs of this club, around 850 funds. Most estimates calculate that this group of people shepherd the lion’s share of the hedge fund industry’s total asset base, and by keeping track of their finest picks, Insider Monkey has unearthed a number of investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a gander at the recent hedge fund action surrounding Nasdaq, Inc. (NASDAQ:NDAQ).
What does smart money think about Nasdaq, Inc. (NASDAQ:NDAQ)?
At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NDAQ over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Nasdaq, Inc. (NASDAQ:NDAQ) was held by Two Sigma Advisors, which reported holding $56.2 million worth of stock at the end of September. It was followed by Balyasny Asset Management with a $21.1 million position. Other investors bullish on the company included Adage Capital Management, GLG Partners, and Millennium Management. In terms of the portfolio weights assigned to each position Lee Capital Management allocated the biggest weight to Nasdaq, Inc. (NASDAQ:NDAQ), around 3.15% of its 13F portfolio. BlueMar Capital Management is also relatively very bullish on the stock, earmarking 0.53 percent of its 13F equity portfolio to NDAQ.
Because Nasdaq, Inc. (NASDAQ:NDAQ) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few money managers that decided to sell off their entire stakes in the second quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at about $10.7 million in stock. David Harding’s fund, Winton Capital Management, also sold off its stock, about $2 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds in the second quarter.
Let’s check out hedge fund activity in other stocks similar to Nasdaq, Inc. (NASDAQ:NDAQ). We will take a look at Copart, Inc. (NASDAQ:CPRT), Banco Santander (Brasil) SA (NYSE:BSBR), Mettler-Toledo International Inc. (NYSE:MTD), Carrier Global Corporation (NYSE:CARR), Lennar Corporation (NYSE:LEN), Energy Transfer L.P. (NYSE:ET), and Church & Dwight Co., Inc. (NYSE:CHD). This group of stocks’ market valuations are closest to NDAQ’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.1 hedge funds with bullish positions and the average amount invested in these stocks was $815 million. That figure was $153 million in NDAQ’s case. Copart, Inc. (NASDAQ:CPRT) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 10 bullish hedge fund positions. Nasdaq, Inc. (NASDAQ:NDAQ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NDAQ is 44.9. 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. 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 21.3% in 2020 through September 25th and surpassed the market by 17.7 percentage points. Unfortunately NDAQ wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); NDAQ investors were disappointed as the stock returned 4.2% since Q2 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.
Disclosure: None. This article was originally published at Insider Monkey.