Here’s What Hedge Funds Think About Nova Measuring Instruments Ltd. (NVMI)

Does Nova Measuring Instruments Ltd. (NASDAQ:NVMI) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

Nova Measuring Instruments Ltd. (NASDAQ:NVMI) has seen an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that NVMI isn’t among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Phill Gross, Adage Capital Management

Let’s view the recent hedge fund action encompassing Nova Measuring Instruments Ltd. (NASDAQ:NVMI).

What does smart money think about Nova Measuring Instruments Ltd. (NASDAQ:NVMI)?

Heading into the second quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards NVMI over the last 15 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

No of Hedge Funds with NVMI Positions

The largest stake in Nova Measuring Instruments Ltd. (NASDAQ:NVMI) was held by Renaissance Technologies, which reported holding $50.5 million worth of stock at the end of March. It was followed by Adage Capital Management with a $35.2 million position. Other investors bullish on the company included Royce & Associates, Arrowstreet Capital, and D E Shaw.

Consequently, key hedge funds were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in Nova Measuring Instruments Ltd. (NASDAQ:NVMI). Arrowstreet Capital had $2.3 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $1.3 million position during the quarter. The other funds with new positions in the stock are Paul Hondros’s AlphaOne Capital Partners, Matthew Hulsizer’s PEAK6 Capital Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s check out hedge fund activity in other stocks similar to Nova Measuring Instruments Ltd. (NASDAQ:NVMI). These stocks are Hanger, Inc. (NYSE:HNGR), Precision Drilling Corp (NYSE:PDS), Modine Manufacturing Company (NYSE:MOD), and Banc of California, Inc. (NYSE:BANC). This group of stocks’ market values resemble NVMI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HNGR 22 155181 4
PDS 16 36738 2
MOD 17 69889 0
BANC 15 92220 -2
Average 17.5 88507 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $105 million in NVMI’s case. Hanger, Inc. (NYSE:HNGR) is the most popular stock in this table. On the other hand Banc of California, Inc. (NYSE:BANC) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Nova Measuring Instruments Ltd. (NASDAQ:NVMI) is even less popular than BANC. Hedge funds dodged a bullet by taking a bearish stance towards NVMI. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately NVMI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NVMI investors were disappointed as the stock returned 3.3% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.

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