Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Navient Corp (NASDAQ:NAVI)? The smart money sentiment can provide an answer to this question.
Is NAVI a good stock to buy now? The best stock pickers were taking an optimistic view. The number of bullish hedge fund bets advanced by 6 recently. Navient Corp (NASDAQ:NAVI) was in 23 hedge funds’ portfolios at the end of September. The all time high for this statistic is 38. Our calculations also showed that NAVI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 17 hedge funds in our database with NAVI holdings at the end of June.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to go over the key hedge fund action encompassing Navient Corp (NASDAQ:NAVI).
Do Hedge Funds Think NAVI Is A Good Stock To Buy Now?
At the end of September, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 35% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in NAVI over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in Navient Corp (NASDAQ:NAVI), which was worth $74.2 million at the end of the third quarter. On the second spot was Portolan Capital Management which amassed $20.2 million worth of shares. AQR Capital Management, D E Shaw, and Millennium 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 Portolan Capital Management allocated the biggest weight to Navient Corp (NASDAQ:NAVI), around 1.47% of its 13F portfolio. Full18 Capital is also relatively very bullish on the stock, designating 0.32 percent of its 13F equity portfolio to NAVI.
Now, some big names have jumped into Navient Corp (NASDAQ:NAVI) headfirst. TwinBeech Capital, managed by Jinghua Yan, created the largest position in Navient Corp (NASDAQ:NAVI). TwinBeech Capital had $2.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1.5 million investment in the stock during the quarter. The other funds with brand new NAVI positions are Greg Eisner’s Engineers Gate Manager, Donald Sussman’s Paloma Partners, and Allon Hellmann’s Full18 Capital.
Let’s check out hedge fund activity in other stocks similar to Navient Corp (NASDAQ:NAVI). These stocks are Welbilt, Inc. (NYSE:WBT), The Simply Good Foods Company (NASDAQ:SMPL), Essential Properties Realty Trust, Inc. (NYSE:EPRT), Nektar Therapeutics (NASDAQ:NKTR), Shake Shack Inc (NYSE:SHAK), M.D.C. Holdings, Inc. (NYSE:MDC), and Veracyte Inc (NASDAQ:VCYT). This group of stocks’ market values are similar to NAVI’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 22 hedge funds with bullish positions and the average amount invested in these stocks was $335 million. That figure was $156 million in NAVI’s case. Welbilt, Inc. (NYSE:WBT) is the most popular stock in this table. On the other hand Essential Properties Realty Trust, Inc. (NYSE:EPRT) is the least popular one with only 10 bullish hedge fund positions. Navient Corp (NASDAQ:NAVI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NAVI is 51.4. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately NAVI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NAVI were disappointed as the stock returned 4.8% since the end of September (through 12/9) 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.