The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Nelnet, Inc. (NYSE:NNI).
Is NNI a good stock to buy now? Money managers were in a bullish mood. The number of bullish hedge fund positions rose by 1 in recent months. Nelnet, Inc. (NYSE:NNI) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 21. Our calculations also showed that NNI 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 NNI holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are viewed as slow, outdated financial vehicles of yesteryear. While there are greater than 8000 funds trading today, Our researchers hone in on the top tier of this group, about 850 funds. These hedge fund managers control the lion’s share of the smart money’s total capital, and by paying attention to their best picks, Insider Monkey has spotted several investment strategies that have historically outperformed the market. 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 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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. With all of this in mind let’s check out the fresh hedge fund action surrounding Nelnet, Inc. (NYSE:NNI).
Do Hedge Funds Think NNI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NNI over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Magnolia Capital Fund, managed by Adam Peterson, holds the largest position in Nelnet, Inc. (NYSE:NNI). Magnolia Capital Fund has a $95 million position in the stock, comprising 13.9% of its 13F portfolio. The second most bullish fund manager is Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, which holds a $24.1 million position; the fund has 1% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Jesse Ro’s Tiger Legatus Capital, Israel Englander’s Millennium Management and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Magnolia Capital Fund allocated the biggest weight to Nelnet, Inc. (NYSE:NNI), around 13.86% of its 13F portfolio. Tiger Legatus Capital is also relatively very bullish on the stock, setting aside 3.33 percent of its 13F equity portfolio to NNI.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, assembled the most outsized position in Nelnet, Inc. (NYSE:NNI). Empyrean Capital Partners had $24.1 million invested in the company at the end of the quarter. Jesse Ro’s Tiger Legatus Capital also initiated a $7.3 million position during the quarter. The following funds were also among the new NNI investors: Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Nelnet, Inc. (NYSE:NNI) but similarly valued. We will take a look at Wintrust Financial Corporation (NASDAQ:WTFC), Revolution Medicines, Inc. (NASDAQ:RVMD), Mercury General Corporation (NYSE:MCY), TreeHouse Foods Inc. (NYSE:THS), Focus Financial Partners Inc. (NASDAQ:FOCS), Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), and International Game Technology PLC (NYSE:IGT). All of these stocks’ market caps resemble NNI’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 22 hedge funds with bullish positions and the average amount invested in these stocks was $220 million. That figure was $133 million in NNI’s case. TreeHouse Foods Inc. (NYSE:THS) is the most popular stock in this table. On the other hand Focus Financial Partners Inc. (NASDAQ:FOCS) is the least popular one with only 11 bullish hedge fund positions. Nelnet, Inc. (NYSE:NNI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NNI is 29.8. 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 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on NNI as the stock returned 16% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.