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Hedge Funds Have Never Been This Bullish On Navistar International Corp (NAV)

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Navistar International Corp (NYSE:NAV).

Navistar International Corp (NYSE:NAV) was in 36 hedge funds’ portfolios at the end of the first quarter of 2020. NAV investors should pay attention to an increase in support from the world’s most elite money managers in recent months. There were 27 hedge funds in our database with NAV positions at the end of the previous quarter. Our calculations also showed that NAV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Most Popular Stocks Among Hedge Funds

Carl Icahn of Icahn Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the new hedge fund action surrounding Navistar International Corp (NYSE:NAV).

How are hedge funds trading Navistar International Corp (NYSE:NAV)?

At Q1’s end, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the fourth quarter of 2019. On the other hand, there were a total of 23 hedge funds with a bullish position in NAV a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

The largest stake in Navistar International Corp (NYSE:NAV) was held by Icahn Capital LP, which reported holding $275.9 million worth of stock at the end of September. It was followed by MHR Fund Management with a $267.6 million position. Other investors bullish on the company included GAMCO Investors, TIG Advisors, and Renaissance Technologies. In terms of the portfolio weights assigned to each position MHR Fund Management allocated the biggest weight to Navistar International Corp (NYSE:NAV), around 40.63% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, setting aside 2.01 percent of its 13F equity portfolio to NAV.

As aggregate interest increased, key hedge funds have jumped into Navistar International Corp (NYSE:NAV) headfirst. TIG Advisors, managed by Carl Tiedemann and Michael Tiedemann, established the most valuable position in Navistar International Corp (NYSE:NAV). TIG Advisors had $47.5 million invested in the company at the end of the quarter. Robert Emil Zoellner’s Alpine Associates also initiated a $13.4 million position during the quarter. The other funds with new positions in the stock are Clint Carlson’s Carlson Capital, John Paulson’s Paulson & Co, and Steven Clark’s Omni Partners.

Let’s now review hedge fund activity in other stocks similar to Navistar International Corp (NYSE:NAV). We will take a look at Belden Inc. (NYSE:BDC), Evertec Inc (NYSE:EVTC), Capitol Federal Financial, Inc. (NASDAQ:CFFN), and CONMED Corporation (NYSE:CNMD). This group of stocks’ market caps match NAV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BDC 14 53342 2
EVTC 19 197628 0
CFFN 11 108700 -5
CNMD 29 207132 -2
Average 18.25 141701 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $760 million in NAV’s case. CONMED Corporation (NYSE:CNMD) is the most popular stock in this table. On the other hand Capitol Federal Financial, Inc. (NASDAQ:CFFN) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Navistar International Corp (NYSE:NAV) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on NAV as the stock returned 52.5% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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