The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Nova Measuring Instruments Ltd. (NASDAQ:NVMI) based on those filings.
Is NVMI a good stock to buy now? Nova Measuring Instruments Ltd. (NASDAQ:NVMI) investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. Nova Measuring Instruments Ltd. (NASDAQ:NVMI) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 14. Our calculations also showed that NVMI 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.
At the moment there are several methods investors put to use to size up their holdings. Two of the less utilized methods are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the broader indices by a solid margin (see the details here).
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. Keeping this in mind let’s take a look at the new hedge fund action regarding Nova Measuring Instruments Ltd. (NASDAQ:NVMI).
Do Hedge Funds Think NVMI Is A Good Stock To Buy Now?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the second quarter of 2020. By comparison, 10 hedge funds held shares or bullish call options in NVMI a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Adage Capital Management held the most valuable stake in Nova Measuring Instruments Ltd. (NASDAQ:NVMI), which was worth $90.9 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $89.8 million worth of shares. Royce & Associates, Arrowstreet Capital, and PEAK6 Capital 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 Adage Capital Management allocated the biggest weight to Nova Measuring Instruments Ltd. (NASDAQ:NVMI), around 0.23% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.21 percent of its 13F equity portfolio to NVMI.
Judging by the fact that Nova Measuring Instruments Ltd. (NASDAQ:NVMI) has witnessed a decline in interest from hedge fund managers, we can see that there were a few hedge funds that decided to sell off their full holdings heading into Q4. Interestingly, Donald Sussman’s Paloma Partners dropped the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $0.4 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also dropped its stock, about $0.3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Nova Measuring Instruments Ltd. (NASDAQ:NVMI) but similarly valued. These stocks are MicroStrategy Incorporated (NASDAQ:MSTR), La-Z-Boy Incorporated (NYSE:LZB), Onto Innovation Inc. (NYSE:ONTO), Health Catalyst, Inc (NASDAQ:HCAT), Domtar Corporation (NYSE:UFS), American Assets Trust, Inc (NYSE:AAT), and AeroVironment, Inc. (NASDAQ:AVAV). This group of stocks’ market values are closest to NVMI’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 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $212 million in NVMI’s case. Domtar Corporation (NYSE:UFS) is the most popular stock in this table. On the other hand Health Catalyst, Inc (NASDAQ:HCAT) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Nova Measuring Instruments Ltd. (NASDAQ:NVMI) is even less popular than HCAT. Our overall hedge fund sentiment score for NVMI is 26.6. 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. Hedge funds clearly dropped the ball on NVMI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 NVMI as the stock returned 34.2% since Q3 (through December 8th) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.