Nordson Corporation (NDSN): Hedge Funds Taking Some Chips Off The Table

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Nordson Corporation (NASDAQ:NDSN).

Is Nordson Corporation (NASDAQ:NDSN) worth your attention right now? Money managers are in a pessimistic mood. The number of bullish hedge fund positions decreased by 7 recently. Our calculations also showed that NDSN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the key hedge fund action regarding Nordson Corporation (NASDAQ:NDSN).

What does smart money think about Nordson Corporation (NASDAQ:NDSN)?

At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in NDSN a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Nordson Corporation (NASDAQ:NDSN) was held by Arrowstreet Capital, which reported holding $15.8 million worth of stock at the end of September. It was followed by Balyasny Asset Management with a $13 million position. Other investors bullish on the company included Royce & Associates, Citadel Investment Group, and Columbus Circle Investors. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to Nordson Corporation (NASDAQ:NDSN), around 2.34% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, dishing out 1.83 percent of its 13F equity portfolio to NDSN.

Seeing as Nordson Corporation (NASDAQ:NDSN) has faced falling interest from the smart money, logic holds that there exists a select few funds that decided to sell off their entire stakes in the first quarter. It’s worth mentioning that Renaissance Technologies sold off the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at close to $5.5 million in stock. Qing Li’s fund, Sciencast Management, also said goodbye to its stock, about $1.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 7 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Nordson Corporation (NASDAQ:NDSN). These stocks are Erie Indemnity Company (NASDAQ:ERIE), Apollo Global Management Inc (NYSE:APO), Globe Life Inc. (NYSE:GL), and RPM International Inc. (NYSE:RPM). All of these stocks’ market caps resemble NDSN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ERIE 17 63002 -3
APO 34 1487468 5
GL 22 574230 -1
RPM 22 191448 -9
Average 23.75 579037 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $579 million. That figure was $99 million in NDSN’s case. Apollo Global Management Inc (NYSE:APO) is the most popular stock in this table. On the other hand Erie Indemnity Company (NASDAQ:ERIE) is the least popular one with only 17 bullish hedge fund positions. Nordson Corporation (NASDAQ:NDSN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on NDSN as the stock returned 45.9% during the second quarter and outperformed the market by an even larger margin.

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