Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
NIKE, Inc. (NYSE:NKE) investors should pay attention to an increase in enthusiasm from smart money lately. NKE was in 59 hedge funds’ portfolios at the end of the third quarter of 2015. There were 57 hedge funds in our database with NKE positions at the end of the previous quarter. At the end of this article we will also compare NKE to other stocks, including Lloyds Banking Group PLC (ADR) (NYSE:LYG), BHP Billiton plc (ADR) (NYSE:BBL), and AstraZeneca plc (ADR) (NYSE:AZN) to get a better sense of its popularity.
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To most market participants, hedge funds are seen as slow, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, Our experts look at the bigwigs of this club, about 700 funds. Most estimates calculate that this group of people direct the majority of the hedge fund industry’s total capital, and by tracking their highest performing investments, Insider Monkey has spotted a few investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, we’re going to go over the new action regarding NIKE, Inc. (NYSE:NKE).
Hedge fund activity in NIKE, Inc. (NYSE:NKE)
At the end of the third quarter, a total of 59 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Lone Pine Capital, managed by Stephen Mandel, holds the most valuable position in NIKE, Inc. (NYSE:NKE). Lone Pine Capital has a $701 million position in the stock, comprising 2.9% of its 13F portfolio. On Lone Pine Capital’s heels is AQR Capital Management, led by Cliff Asness, holding a $380.7 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions include Clifford Fox’s Columbus Circle Investors, D. E. Shaw’s D E Shaw, and Andreas Halvorsen’s Viking Global.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Viking Global assembled the largest position in NIKE, Inc. (NYSE:NKE). Viking Global had $217.6 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $92.2 million investment in the stock during the quarter. The following funds were also among the new NKE investors: Ken Heebner’s Capital Growth Management, David Keidan’s Buckingham Capital Management, and Jim Simons’ Renaissance Technologies.
Let’s now take a look at hedge fund activity in other stocks similar to NIKE, Inc. (NYSE:NKE). These stocks are Lloyds Banking Group PLC (ADR) (NYSE:LYG), BHP Billiton plc (ADR) (NYSE:BBL), AstraZeneca plc (ADR) (NYSE:AZN), and Royal Bank of Canada (USA) (NYSE:RY). All of these stocks’ market caps resemble NKE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LYG | 8 | 402535 | -5 |
| BBL | 4 | 82863 | -2 |
| AZN | 18 | 401752 | -2 |
| RY | 17 | 504408 | -4 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $348 million. That figure was $4.49 billion in NKE’s case. AstraZeneca plc (ADR) (NYSE:AZN) is the most popular stock in this table with a total of 18 funds reporting long positions. On the other hand BHP Billiton plc (ADR) (NYSE:BBL) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks NIKE, Inc. (NYSE:NKE) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
