Is National Vision Holdings, Inc. (NASDAQ:EYE) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
National Vision Holdings, Inc. (NASDAQ:EYE) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that EYE isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the key hedge fund action surrounding National Vision Holdings, Inc. (NASDAQ:EYE).
Hedge fund activity in National Vision Holdings, Inc. (NASDAQ:EYE)
At the end of the second quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EYE over the last 16 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Adage Capital Management held the most valuable stake in National Vision Holdings, Inc. (NASDAQ:EYE), which was worth $223.5 million at the end of the second quarter. On the second spot was Select Equity Group which amassed $118.6 million worth of shares. Moreover, Millennium Management, Scopus Asset Management, and Marshall Wace LLP were also bullish on National Vision Holdings, Inc. (NASDAQ:EYE), allocating a large percentage of their portfolios to this stock.
Consequently, specific money managers were leading the bulls’ herd. Scopus Asset Management, managed by Alexander Mitchell, established the most outsized position in National Vision Holdings, Inc. (NASDAQ:EYE). Scopus Asset Management had $10.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $5.6 million position during the quarter. The other funds with brand new EYE positions are Sander Gerber’s Hudson Bay Capital Management, Peter Muller’s PDT Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks similar to National Vision Holdings, Inc. (NASDAQ:EYE). These stocks are CareTrust REIT Inc (NASDAQ:CTRE), Transportadora de Gas del Sur SA (NYSE:TGS), Medpace Holdings, Inc. (NASDAQ:MEDP), and Allegiant Travel Company (NASDAQ:ALGT). All of these stocks’ market caps resemble EYE’s market cap.
|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 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $416 million in EYE’s case. CareTrust REIT Inc (NASDAQ:CTRE) is the most popular stock in this table. On the other hand Transportadora de Gas del Sur SA (NYSE:TGS) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks National Vision Holdings, Inc. (NASDAQ:EYE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately EYE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EYE were disappointed as the stock returned -21.7% during the third quarter 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.