We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards National Instruments Corporation (NASDAQ:NATI) and determine whether hedge funds skillfully traded this stock.
Is National Instruments Corporation (NASDAQ:NATI) the right investment to pursue these days? Hedge funds were in a bullish mood. The number of long hedge fund positions moved up by 6 recently. National Instruments Corporation (NASDAQ:NATI) was in 35 hedge funds’ portfolios at the end of June. The all time high for this statistics is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NATI isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
According to most market participants, hedge funds are assumed to be slow, outdated financial tools of the past. While there are greater than 8000 funds trading today, We choose to focus on the leaders of this group, approximately 850 funds. Most estimates calculate that this group of people oversee most of the smart money’s total capital, and by paying attention to their top investments, Insider Monkey has formulated various investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s go over the new hedge fund action encompassing National Instruments Corporation (NASDAQ:NATI).
What have hedge funds been doing with National Instruments Corporation (NASDAQ:NATI)?
At the end of June, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NATI over the last 20 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in National Instruments Corporation (NASDAQ:NATI), which was worth $60.9 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $33.3 million worth of shares. D E Shaw, Bares Capital Management, and Fairpointe Capital 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 Jade Capital Advisors allocated the biggest weight to National Instruments Corporation (NASDAQ:NATI), around 5.27% of its 13F portfolio. Southport Management is also relatively very bullish on the stock, setting aside 4.34 percent of its 13F equity portfolio to NATI.
With a general bullishness amongst the heavyweights, key money managers have jumped into National Instruments Corporation (NASDAQ:NATI) headfirst. Fairpointe Capital, managed by Thyra Zerhusen, initiated the most valuable position in National Instruments Corporation (NASDAQ:NATI). Fairpointe Capital had $18.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $6.5 million investment in the stock during the quarter. The following funds were also among the new NATI investors: Michael Gelband’s ExodusPoint Capital, Donald Sussman’s Paloma Partners, and Mika Toikka’s AlphaCrest Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as National Instruments Corporation (NASDAQ:NATI) but similarly valued. We will take a look at CDK Global Inc (NASDAQ:CDK), Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), Euronet Worldwide, Inc. (NASDAQ:EEFT), Mirati Therapeutics, Inc. (NASDAQ:MRTX), Old Republic International Corporation (NYSE:ORI), and Dada Nexus Limited (NASDAQ:DADA). This group of stocks’ market values are similar to NATI’s market value.
|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 25 hedge funds with bullish positions and the average amount invested in these stocks was $396 million. That figure was $259 million in NATI’s case. Euronet Worldwide, Inc. (NASDAQ:EEFT) is the most popular stock in this table. On the other hand Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC) is the least popular one with only 5 bullish hedge fund positions. National Instruments Corporation (NASDAQ:NATI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NATI is 86.9. 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 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 gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately NATI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NATI were disappointed as the stock returned -6.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.