Hedge Funds Keep Betting On NICE Ltd (NICE)

In this article we will analyze whether NICE Ltd (NASDAQ:NICE) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

NICE Ltd (NASDAQ:NICE) investors should be aware of an increase in hedge fund sentiment of late. NICE Ltd (NASDAQ:NICE) was in 33 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 26 hedge funds in our database with NICE holdings at the end of December. Our calculations also showed that NICE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Robert Moses RGM Capital

Robert Moses of RGM Capital

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. Keeping this in mind let’s check out the new hedge fund action encompassing NICE Ltd (NASDAQ:NICE).

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

Heading into the second quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the fourth quarter of 2020. By comparison, 22 hedge funds held shares or bullish call options in NICE a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, RGM Capital was the largest shareholder of NICE Ltd (NASDAQ:NICE), with a stake worth $171.3 million reported as of the end of March. Trailing RGM Capital was Eminence Capital, which amassed a stake valued at $127.6 million. Rivulet Capital, Point72 Asset Management, and Renaissance Technologies 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 Blackcrane Capital allocated the biggest weight to NICE Ltd (NASDAQ:NICE), around 9.42% of its 13F portfolio. RGM Capital is also relatively very bullish on the stock, dishing out 7.5 percent of its 13F equity portfolio to NICE.

Now, key money managers have been driving this bullishness. Eminence Capital, managed by Ricky Sandler, initiated the most valuable position in NICE Ltd (NASDAQ:NICE). Eminence Capital had $127.6 million invested in the company at the end of the quarter. Barry Lebovits and Joshua Kuntz’s Rivulet Capital also made a $119.9 million investment in the stock during the quarter. The following funds were also among the new NICE investors: Eric Bannasch’s Cadian Capital, Jeffrey Hoffner’s Engle Capital, and Marc Majzner’s Clearline Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NICE Ltd (NASDAQ:NICE) but similarly valued. These stocks are Molina Healthcare, Inc. (NYSE:MOH), The Scotts Miracle-Gro Company (NYSE:SMG), Dynatrace, Inc. (NYSE:DT), Leidos Holdings Inc (NYSE:LDOS), James Hardie Industries plc (NYSE:JHX), NovoCure Limited (NASDAQ:NVCR), and Alliant Energy Corporation (NASDAQ:LNT). This group of stocks’ market values are closest to NICE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MOH 31 1561071 4
SMG 34 445170 5
DT 52 1638106 -1
LDOS 18 93802 4
JHX 4 12557 0
NVCR 22 292428 0
LNT 13 98600 -16
Average 24.9 591676 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $592 million. That figure was $868 million in NICE’s case. Dynatrace, Inc. (NYSE:DT) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 4 bullish hedge fund positions. NICE Ltd (NASDAQ:NICE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NICE is 70.2. 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. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on NICE, though not to the same extent, as the stock returned 16.1% since Q1 (through July 2nd) and outperformed the market as well.

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