Hedge Funds Are Warming Up To NiSource Inc. (NI)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards NiSource Inc. (NYSE:NI).

NiSource Inc. (NYSE:NI) has experienced an increase in support from the world’s most elite money managers in recent months. NiSource Inc. (NYSE:NI) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To the average investor there are dozens of methods investors have at their disposal to assess stocks. A couple of the most underrated methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the top money managers can trounce the broader indices by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. 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 homepage. Now let’s review the latest hedge fund action regarding NiSource Inc. (NYSE:NI).

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

At the end of March, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in NI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is NI A Good Stock To Buy?

Among these funds, Citadel Investment Group held the most valuable stake in NiSource Inc. (NYSE:NI), which was worth $61 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $58.7 million worth of shares. ExodusPoint Capital, D E Shaw, and Adage Capital Management 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 Yaupon Capital allocated the biggest weight to NiSource Inc. (NYSE:NI), around 2.79% of its 13F portfolio. Wexford Capital is also relatively very bullish on the stock, setting aside 0.93 percent of its 13F equity portfolio to NI.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. SIR Capital Management, managed by Vince Maddi and Shawn Brennan, established the largest position in NiSource Inc. (NYSE:NI). SIR Capital Management had $3.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $3.5 million position during the quarter. The following funds were also among the new NI investors: Steve Pattyn’s Yaupon Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s also examine hedge fund activity in other stocks similar to NiSource Inc. (NYSE:NI). We will take a look at Kohl’s Corporation (NYSE:KSS), Appian Corporation (NASDAQ:APPN), First Horizon National Corporation (NYSE:FHN), AptarGroup, Inc. (NYSE:ATR), Deckers Outdoor Corp (NASDAQ:DECK), Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), and First Solar, Inc. (NASDAQ:FSLR). This group of stocks’ market valuations are closest to NI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KSS 35 1417821 -5
APPN 24 914428 0
FHN 27 312101 -3
ATR 20 259991 0
DECK 40 922422 -5
JAZZ 37 1260492 8
FSLR 24 304351 -10
Average 29.6 770229 -2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $770 million. That figure was $268 million in NI’s case. Deckers Outdoor Corp (NASDAQ:DECK) is the most popular stock in this table. On the other hand AptarGroup, Inc. (NYSE:ATR) is the least popular one with only 20 bullish hedge fund positions. NiSource Inc. (NYSE:NI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NI is 60. 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 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 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately NI wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NI investors were disappointed as the stock returned 5.2% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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