Hedge Funds Have Never Been This Bullish On Norfolk Southern Corp. (NSC)

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Norfolk Southern Corp. (NYSE:NSC) changed recently.

Is Norfolk Southern Corp. (NYSE:NSC) a buy here? Investors who are in the know were turning bullish. The number of bullish hedge fund positions improved by 12 in recent months. Norfolk Southern Corp. (NYSE:NSC) was in 58 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 54. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NSC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To most shareholders, hedge funds are viewed as slow, outdated financial tools of years past. While there are more than 8000 funds trading today, Our experts look at the top tier of this club, approximately 850 funds. It is estimated that this group of investors manage the majority of the hedge fund industry’s total asset base, and by tracking their first-class stock picks, Insider Monkey has uncovered various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .


Ken Fisher of Fisher Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. With all of this in mind we’re going to check out the latest hedge fund action encompassing Norfolk Southern Corp. (NYSE:NSC).

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

At the end of the second quarter, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NSC over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Palestra Capital Management held the most valuable stake in Norfolk Southern Corp. (NYSE:NSC), which was worth $218 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $166.6 million worth of shares. Millennium Management, 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 Palestra Capital Management allocated the biggest weight to Norfolk Southern Corp. (NYSE:NSC), around 4.69% of its 13F portfolio. Alight Capital is also relatively very bullish on the stock, designating 3.82 percent of its 13F equity portfolio to NSC.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, established the most outsized position in Norfolk Southern Corp. (NYSE:NSC). Senator Investment Group had $86.3 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $85.2 million position during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Joseph Samuels’s Islet Management, and Gregg Moskowitz’s Interval Partners.

Let’s also examine hedge fund activity in other stocks similar to Norfolk Southern Corp. (NYSE:NSC). These stocks are Bank of Montreal (NYSE:BMO), Edwards Lifesciences Corporation (NYSE:EW), Atlassian Corporation Plc (NASDAQ:TEAM), Autodesk, Inc. (NASDAQ:ADSK), The Southern Company (NYSE:SO), Air Products & Chemicals, Inc. (NYSE:APD), and Analog Devices, Inc. (NASDAQ:ADI). This group of stocks’ market caps are similar to NSC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BMO 12 133306 -3
EW 47 2043269 11
TEAM 64 4170236 -3
ADSK 64 3201341 -2
SO 37 606405 2
APD 40 456440 8
ADI 62 5796275 12
Average 46.6 2343896 3.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 46.6 hedge funds with bullish positions and the average amount invested in these stocks was $2344 million. That figure was $1489 million in NSC’s case. Atlassian Corporation Plc (NASDAQ:TEAM) is the most popular stock in this table. On the other hand Bank of Montreal (NYSE:BMO) is the least popular one with only 12 bullish hedge fund positions. Norfolk Southern Corp. (NYSE:NSC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NSC is 84.2. 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 positive signal but 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately NSC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NSC were disappointed as the stock returned -7.1% since the end of June (through 9/27) 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 many of these stocks already outperformed the market since 2019.

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