After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Nexa Resources S.A. (NYSE:NEXA).
Is Nexa Resources S.A. (NYSE:NEXA) ready to rally soon? The best stock pickers are taking a bearish view. The number of bullish hedge fund bets were cut by 3 recently. Our calculations also showed that NEXA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). NEXA was in 6 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with NEXA holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are perceived as underperforming, outdated investment tools of the past. While there are greater than 8000 funds in operation today, Our experts hone in on the elite of this club, about 750 funds. These money managers control most of all hedge funds’ total asset base, and by keeping an eye on their matchless stock picks, Insider Monkey has identified many investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s check out the key hedge fund action encompassing Nexa Resources S.A. (NYSE:NEXA).
Hedge fund activity in Nexa Resources S.A. (NYSE:NEXA)
Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in NEXA a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Nexa Resources S.A. (NYSE:NEXA) was held by Renaissance Technologies, which reported holding $5.2 million worth of stock at the end of September. It was followed by GLG Partners with a $0.7 million position. Other investors bullish on the company included D E Shaw, Millennium Management, and Tudor Investment Corp. In terms of the portfolio weights assigned to each position PDT Partners allocated the biggest weight to Nexa Resources S.A. (NYSE:NEXA), around 0.01% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to NEXA.
Since Nexa Resources S.A. (NYSE:NEXA) has faced a decline in interest from the smart money, it’s safe to say that there exists a select few hedge funds that decided to sell off their full holdings heading into Q4. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the largest stake of the 750 funds tracked by Insider Monkey, totaling an estimated $1.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dropped its stock, about $0.7 million worth. These moves are important to note, as total hedge fund interest was cut by 3 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Nexa Resources S.A. (NYSE:NEXA). We will take a look at National HealthCare Corporation (NYSE:NHC), City Holding Company (NASDAQ:CHCO), NOW Inc (NYSE:DNOW), and Methode Electronics Inc. (NYSE:MEI). All of these stocks’ market caps are similar to NEXA’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 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $7 million in NEXA’s case. NOW Inc (NYSE:DNOW) is the most popular stock in this table. On the other hand National HealthCare Corporation (NYSE:NHC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Nexa Resources S.A. (NYSE:NEXA) is even less popular than NHC. Hedge funds dodged a bullet by taking a bearish stance towards NEXA. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NEXA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NEXA investors were disappointed as the stock returned -9.8% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.