NortonLifeLock Inc. (NLOK): Hedge Funds Are Snapping Up

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million 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 June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded NortonLifeLock Inc. (NASDAQ:NLOK) based on those filings.

NortonLifeLock Inc. (NASDAQ:NLOK) has experienced an increase in enthusiasm from smart money recently. NortonLifeLock Inc. (NASDAQ:NLOK) was in 36 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 46. Our calculations also showed that NLOK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

If you’d ask most shareholders, hedge funds are seen as underperforming, outdated investment tools of the past. While there are more than 8000 funds in operation at the moment, Our experts look at the moguls of this group, about 850 funds. These money managers command bulk of the smart money’s total asset base, and by following their finest investments, Insider Monkey has revealed a number of investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Harold Levy Iridian Asset Management

Harold Levy of Iridian Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s take a look at the key hedge fund action surrounding NortonLifeLock Inc. (NASDAQ:NLOK).

Do Hedge Funds Think NLOK Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NLOK over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in NortonLifeLock Inc. (NASDAQ:NLOK) was held by Starboard Value LP, which reported holding $454.7 million worth of stock at the end of June. It was followed by Iridian Asset Management with a $182.5 million position. Other investors bullish on the company included Arrowstreet Capital, Renaissance Technologies, and Millennium Management. In terms of the portfolio weights assigned to each position 59 North Capital allocated the biggest weight to NortonLifeLock Inc. (NASDAQ:NLOK), around 12.02% of its 13F portfolio. Totem Point Management is also relatively very bullish on the stock, setting aside 9.28 percent of its 13F equity portfolio to NLOK.

Consequently, specific money managers were breaking ground themselves. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), established the biggest position in NortonLifeLock Inc. (NASDAQ:NLOK). Schonfeld Strategic Advisors had $37.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $7.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter S. Park’s Park West Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Bruce Kovner’s Caxton Associates LP.

Let’s now review hedge fund activity in other stocks similar to NortonLifeLock Inc. (NASDAQ:NLOK). These stocks are Nomura Holdings, Inc. (NYSE:NMR), Novavax, Inc. (NASDAQ:NVAX), Arch Capital Group Ltd. (NASDAQ:ACGL), Check Point Software Technologies Ltd. (NASDAQ:CHKP), Altice USA, Inc. (NYSE:ATUS), Natura &Co Holding S.A. (NYSE:NTCO), and The Liberty SiriusXM Group (NASDAQ:LSXMA). This group of stocks’ market caps match NLOK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NMR 7 17637 -3
NVAX 37 1172482 -1
ACGL 22 1438952 -12
CHKP 29 646892 -2
ATUS 44 3176106 -4
NTCO 5 62101 1
LSXMA 43 1926503 5
Average 26.7 1205810 -2.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $1206 million. That figure was $1341 million in NLOK’s case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand Natura &Co Holding S.A. (NYSE:NTCO) is the least popular one with only 5 bullish hedge fund positions. NortonLifeLock Inc. (NASDAQ:NLOK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NLOK is 72.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately NLOK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NLOK were disappointed as the stock returned -5.5% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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