Hedge Funds Are Piling Into Nova Ltd. (NVMI)

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Nova Ltd. (NASDAQ:NVMI).

Nova Ltd. (NASDAQ:NVMI) was in 22 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. NVMI shareholders have witnessed an increase in hedge fund sentiment of late. There were 18 hedge funds in our database with NVMI positions at the end of the second quarter. Our calculations also showed that NVMI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s check out the fresh hedge fund action encompassing Nova Ltd. (NASDAQ:NVMI).

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

Do Hedge Funds Think NVMI Is A Good Stock To Buy Now?

At the end of September, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in NVMI a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Nova Ltd. (NASDAQ:NVMI), with a stake worth $119.1 million reported as of the end of September. Trailing Renaissance Technologies was Adage Capital Management, which amassed a stake valued at $98.5 million. Montanaro Asset Management, Royce & Associates, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Montanaro Asset Management allocated the biggest weight to Nova Ltd. (NASDAQ:NVMI), around 4.63% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, designating 0.9 percent of its 13F equity portfolio to NVMI.

Consequently, key money managers have been driving this bullishness. Intrinsic Edge Capital, managed by Mark Coe, created the most valuable position in Nova Ltd. (NASDAQ:NVMI). Intrinsic Edge Capital had $5.1 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also made a $2.2 million investment in the stock during the quarter. The other funds with brand new NVMI positions are Peter Algert’s Algert Global, Mika Toikka’s AlphaCrest Capital Management, and Ryan Caldwell’s Chiron Investment Management.

Let’s now take a look at hedge fund activity in other stocks similar to Nova Ltd. (NASDAQ:NVMI). These stocks are Uniti Group Inc. (NASDAQ:UNIT), Olink Holding AB (publ) (NASDAQ:OLK), Kirby Corporation (NYSE:KEX), Kontoor Brands, Inc. (NYSE:KTB), Kennametal Inc. (NYSE:KMT), Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), and Cytek Biosciences Inc. (NASDAQ:CTKB). This group of stocks’ market caps are closest to NVMI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UNIT 14 350916 -2
OLK 14 74288 -2
KEX 24 296201 3
KTB 17 118883 -6
KMT 19 434106 1
APLS 30 510124 -1
CTKB 13 524565 13
Average 18.7 329869 0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $330 million. That figure was $331 million in NVMI’s case. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is the most popular stock in this table. On the other hand Cytek Biosciences Inc. (NASDAQ:CTKB) is the least popular one with only 13 bullish hedge fund positions. Nova Ltd. (NASDAQ:NVMI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NVMI is 65.5. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on NVMI as the stock returned 43.2% since the end of Q3 (through 12/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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