At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards NetGear, Inc. (NASDAQ:NTGR).
Is NTGR a good stock to buy now? NetGear, Inc. (NASDAQ:NTGR) was in 20 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. NTGR investors should pay attention to an increase in hedge fund sentiment recently. There were 19 hedge funds in our database with NTGR positions at the end of the second quarter. Our calculations also showed that NTGR 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are viewed as unimportant, outdated financial vehicles of the past. While there are over 8000 funds with their doors open today, Our experts look at the masters of this club, around 850 funds. These money managers preside over the lion’s share of the smart money’s total capital, and by tailing their inimitable investments, Insider Monkey has uncovered a few investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum 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. Now let’s go over the recent hedge fund action regarding NetGear, Inc. (NASDAQ:NTGR).
Do Hedge Funds Think NTGR Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the second quarter of 2020. On the other hand, there were a total of 21 hedge funds with a bullish position in NTGR a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, GMT Capital was the largest shareholder of NetGear, Inc. (NASDAQ:NTGR), with a stake worth $20.8 million reported as of the end of September. Trailing GMT Capital was Arrowstreet Capital, which amassed a stake valued at $10.5 million. Millennium Management, Renaissance Technologies, 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 GMT Capital allocated the biggest weight to NetGear, Inc. (NASDAQ:NTGR), around 1.51% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.27 percent of its 13F equity portfolio to NTGR.
Consequently, some big names were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in NetGear, Inc. (NASDAQ:NTGR). Citadel Investment Group had $1.5 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $0.7 million investment in the stock during the quarter. The other funds with brand new NTGR positions are Hoon Kim’s Quantinno Capital, Joel Greenblatt’s Gotham Asset Management, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NetGear, Inc. (NASDAQ:NTGR) but similarly valued. We will take a look at Pitney Bowes Inc. (NYSE:PBI), Enanta Pharmaceuticals Inc (NASDAQ:ENTA), Banco Macro SA (NYSE:BMA), nLIGHT, Inc. (NASDAQ:LASR), Teekay LNG Partners L.P. (NYSE:TGP), Crestwood Equity Partners LP (NYSE:CEQP), and Acadia Realty Trust (NYSE:AKR). This group of stocks’ market caps are closest to NTGR’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 13 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $65 million in NTGR’s case. Pitney Bowes Inc. (NYSE:PBI) is the most popular stock in this table. On the other hand Crestwood Equity Partners LP (NYSE:CEQP) is the least popular one with only 2 bullish hedge fund positions. NetGear, Inc. (NASDAQ:NTGR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NTGR is 72.9. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on NTGR as the stock returned 18.6% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.