Is Nielsen Hldg NV (NYSE:NLSN) a good stock to buy? The company has been thrust into the limelight after a 1.33% gain on Thursday, June 18, succeeded by heightened interest sown in the company from industry observers the next day after a report from Deadline Hollywood revealed that the firm has hired a banker to study the possible divestment of its film research division, National Research Group, Inc. (NRG). According to Deadline Hollywood, Nielsen NV (NYSE:NLSN) has hired banker Jordan, Edmiston Group, Inc. to explore the possible sale of NRG, the arm of Nielsen NV’s business that is synonymous with movie performance tracking globally. The bank is, according to the publication, the same bank that oversaw last year’s sale of MarketCast from Shamrock Capital Advisors to RLJ Equity Partners, with the help of GE Asset Management. Deadline Hollywood adds that along with MarketCast, Rentrak, Screen Engine/ASI, and PSB Research are likely suitors for NRG.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 142% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
In light of the new development concerning Nielsen NV (NYSE:NLSN), what does activity among hedge funds Insider Monkey tracks show us? From our data, investors who are in the know are taking a bullish view. The number of long hedge fund positions stayed the same at the end of the first quarter of this year, with Nielsen NV being in 29 hedge funds’ portfolios at the end of the first quarter of 2015, the same number of hedge funds’ portfolios that held the stock at the end of the previous quarter. However, the aggregate invested capital among funds increased by nearly 50% to $722 million from just $489 million, a significant development considering it wasn’t helped at all by the movement of the stock, which has often appreciated when we see big increases in aggregate capital like this (the stock was down by less than 1% during the first quarter). This suggests many hedge funds added substantially to their positions and have a very bullish outlook ont he company.
How about insider sentiment related to the company? There were no insider purchases of shares in Nielsen NV (NYSE:NLSN) during the first and second quarters of this year. However, there were insider sales. Of particular note are two large transactions made by Cp Iv Gp, Ltd., a large shareholder of Nielsen NV, during the first half of the year. At the start of March, Cp Iv Gp, Ltd. sold 4 million shares of Nielsen NV to wind down its position in the company to about 9.37 million shares. By the end of April, the firm further sold 6.25 million shares in Nielsen NV to end the first half with about 3.12 million shares remaining in the research firm. James Cuminale, Chief Legal Officer, sold 168,500 shares by the end of May. David Calhoun, Director, sold a total of 356,250 shares in two transactions by the end of May and the start of this month.
Keeping this in mind, let’s dig deeper into the latest hedge fund action in Nielsen NV.
How are hedge funds trading Nielsen Hldg NV (NYSE:NLSN)?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier.
According to hedge fund intelligence website Insider Monkey, Platinum Asset Management, managed by Kerr Neilson, holds the number one position in Nielsen NV (NYSE:NLSN). Platinum Asset Management has a $150.6 million position in the stock, comprising 3% of its 13F portfolio. Sitting on the No. 2 spot is Generation Investment Management, led by David Blood and Al Gore, holding a $108.5 million position. The fund has 1.5% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include John A. Levin’s Levin Capital Strategies, Daniel Bubis’ Tetrem Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
On the flip side of the coin, some hedge funds have unloaded large stakes in Nielsen NV (NYSE:NLSN). Intriguingly, Daniel S. Och’s OZ Management dumped the biggest stake of all the hedgies watched by Insider Monkey, worth about $13.1 million in stock, while Phill Gross and Robert Atchinson of Adage Capital Management were right behind this move, as the fund managers said goodbye to about $6.3 million worth of stock.
Taking into account the generally bullish hedge fund sentiment and the move by the company to divest itself of a business that the market is applauding, we recommend a long position in Nielsen NV (NYSE:NLSN).