Is NLS A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Nautilus, Inc. (NYSE:NLS).

Is NLS a good stock to buy now? Money managers were betting on the stock. The number of long hedge fund bets improved by 5 recently. Nautilus, Inc. (NYSE:NLS) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 27. Our calculations also showed that NLS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 12 hedge funds in our database with NLS positions at the end of the second quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are a multitude of formulas shareholders use to evaluate stocks. A duo of the most underrated formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outpace the market by a superb amount (see the details here).


Cliff Asness of AQR Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. 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 website. Now let’s review the fresh hedge fund action encompassing Nautilus, Inc. (NYSE:NLS).

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

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 42% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in NLS over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Richard Driehaus’s Driehaus Capital has the largest position in Nautilus, Inc. (NYSE:NLS), worth close to $20.8 million, corresponding to 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $12.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Charles Paquelet’s Skylands Capital, Renaissance Technologies and Scott Stewart Miller’s Greenhaven Road Investment Management. In terms of the portfolio weights assigned to each position Greenhaven Road Investment Management allocated the biggest weight to Nautilus, Inc. (NYSE:NLS), around 3.17% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, setting aside 2.03 percent of its 13F equity portfolio to NLS.

As one would reasonably expect, some big names were leading the bulls’ herd. Greenhaven Road Investment Management, managed by Scott Stewart Miller, initiated the largest position in Nautilus, Inc. (NYSE:NLS). Greenhaven Road Investment Management had $8.2 million invested in the company at the end of the quarter. Joe DiMenna’s ZWEIG DIMENNA PARTNERS also initiated a $4.4 million position during the quarter. The other funds with new positions in the stock are Ken Grossman and Glen Schneider’s SG Capital Management, Josh Goldberg’s G2 Investment Partners Management, and Cliff Asness’s AQR Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Nautilus, Inc. (NYSE:NLS) but similarly valued. These stocks are Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE:LOMA), Front Yard Residential Corporation (NYSE:RESI), Flexion Therapeutics Inc (NASDAQ:FLXN), Globalstar, Inc. (NYSE:GSAT), FuelCell Energy, Inc. (NASDAQ:FCEL), Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN), and, Inc. (NASDAQ:PRTS). All of these stocks’ market caps resemble NLS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LOMA 9 37079 -2
RESI 20 56519 -5
FLXN 17 121644 2
GSAT 11 49117 2
FCEL 17 35393 9
MAXN 5 17787 5
PRTS 22 149170 8
Average 14.4 66673 2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $87 million in NLS’s case., Inc. (NASDAQ:PRTS) is the most popular stock in this table. On the other hand Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN) is the least popular one with only 5 bullish hedge fund positions. Nautilus, Inc. (NYSE:NLS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NLS is 64.2. 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. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately NLS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NLS were disappointed as the stock returned -0.5% since the end of September (through 12/14) 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 many of these stocks already outperformed the market so far this year.

Follow Nautilus Inc. (NYSE:NLS)

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