With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was nVent Electric plc (NYSE:NVT).
nVent Electric plc (NYSE:NVT) investors should be aware of an increase in activity from the world’s largest hedge funds lately. nVent Electric plc (NYSE:NVT) was in 31 hedge funds’ portfolios at the end of March. The all time high for this statistic is 34. Our calculations also showed that NVT 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.
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. Now let’s take a peek at the recent hedge fund action encompassing nVent Electric plc (NYSE:NVT).
Do Hedge Funds Think NVT Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in NVT a year ago. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Ariel Investments held the most valuable stake in nVent Electric plc (NYSE:NVT), which was worth $84.2 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $50.1 million worth of shares. Sessa Capital, Citadel Investment Group, and Two Sigma Advisors 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 Levin Easterly Partners allocated the biggest weight to nVent Electric plc (NYSE:NVT), around 1.68% of its 13F portfolio. Greenhouse Funds is also relatively very bullish on the stock, earmarking 1.24 percent of its 13F equity portfolio to NVT.
Consequently, key hedge funds were breaking ground themselves. Ariel Investments, managed by John W. Rogers, initiated the biggest position in nVent Electric plc (NYSE:NVT). Ariel Investments had $84.2 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also initiated a $18.8 million position during the quarter. The other funds with new positions in the stock are Joe Milano’s Greenhouse Funds, Louis Bacon’s Moore Global Investments, and Anand Parekh’s Alyeska Investment Group.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as nVent Electric plc (NYSE:NVT) but similarly valued. These stocks are MGIC Investment Corporation (NYSE:MTG), Hexcel Corporation (NYSE:HXL), UFP Industries, Inc. (NASDAQ:UFPI), Perspecta Inc. (NYSE:PRSP), Hamilton Lane Incorporated (NASDAQ:HLNE), FireEye Inc (NASDAQ:FEYE), and Altair Engineering Inc. (NASDAQ:ALTR). This group of stocks’ market values are similar to NVT’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 23 hedge funds with bullish positions and the average amount invested in these stocks was $334 million. That figure was $339 million in NVT’s case. Perspecta Inc. (NYSE:PRSP) is the most popular stock in this table. On the other hand UFP Industries, Inc. (NASDAQ:UFPI) is the least popular one with only 16 bullish hedge fund positions. nVent Electric plc (NYSE:NVT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NVT is 64.6. 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 NVT, though not to the same extent, as the stock returned 13.2% 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.