NVIDIA Corporation (NVDA): Hedge Fund and Insider Sentiment Unchanged, What Should You Do?

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Is NVIDIA Corporation (NASDAQ:NVDA) a buy?

In the eyes of many market players, hedge funds are viewed as useless, outdated financial vehicles of a forgotten age. Although there are over 8,000 hedge funds trading in present day, this site aim at the aristocrats of this group, close to 525 funds. Analysts calculate that this group controls the lion’s share of the hedge fund industry’s total assets, and by watching their highest quality stock picks, we’ve uncovered a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (find the details here).


Just as crucial, bullish insider trading sentiment is a second way to look at the marketplace. There are lots of reasons for an insider to cut shares of his or her company, but just one, very obvious reason why they would buy. Various empirical studies have demonstrated the useful potential of this strategy if you know what to do (learn more here).

Now that that’s out of the way, let’s examine the newest info for NVIDIA Corporation (NASDAQ:NVDA).

What does the smart money think about NVIDIA Corporation (NASDAQ:NVDA)?

In preparation for the third quarter, a total of 29 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially.

When using filings from the hedgies we track, Cliff Asness’s AQR Capital Management had the biggest position in NVIDIA Corporation (NASDAQ:NVDA), worth close to $67.8 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Jeffrey Smith of Starboard Value LP, with a $61.8 million position; 4.3% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Martin Whitman’s Third Avenue Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jim Simons’s Renaissance Technologies.

Judging by the fact that NVIDIA Corporation (NASDAQ:NVDA) has faced declining interest from the top-tier hedge fund industry, we can see that there lies a certain “tier” of funds who were dropping their positions entirely in Q1. It’s worth mentioning that Scott Sinclair and Laurence Chang’s Cascabel Management cut the biggest investment of the 450+ funds we track, comprising close to $9.6 million in call options., and Israel Englander of Millennium Management was right behind this move, as the fund dropped about $6.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading NVIDIA Corporation (NASDAQ:NVDA)?

Insider buying made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the latest half-year time frame, NVIDIA Corporation (NASDAQ:NVDA) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to NVIDIA Corporation (NASDAQ:NVDA). These stocks are ARM Holdings plc (ADR) (NASDAQ:ARMH), LSI Corp (NASDAQ:LSI), Altera Corporation (NASDAQ:ALTR), Linear Technology Corporation (NASDAQ:LLTC), and Microchip Technology Inc. (NASDAQ:MCHP). All of these stocks are in the semiconductor – specialized industry and their market caps are similar to NVDA’s market cap.

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