Should I Avoid Navient Corp (NAVI)?

In this article you are going to find out whether hedge funds think Navient Corp (NASDAQ:NAVI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Navient Corp (NASDAQ:NAVI) a safe stock to buy now? The best stock pickers were cutting their exposure. The number of bullish hedge fund bets retreated by 5 recently. Navient Corp (NASDAQ:NAVI) was in 23 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 38. Our calculations also showed that NAVI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 28 hedge funds in our database with NAVI holdings at the end of December.

To the average investor there are numerous signals stock market investors can use to grade publicly traded companies. Some of the less known signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outperform their index-focused peers by a solid margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Billionaire Lee Cooperman’s Top 10 Stock Picks

Leon Cooperman of Omega Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 analyze the fresh hedge fund action regarding Navient Corp (NASDAQ:NAVI).

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

At first quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the fourth quarter of 2020. By comparison, 33 hedge funds held shares or bullish call options in NAVI a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Omega Advisors was the largest shareholder of Navient Corp (NASDAQ:NAVI), with a stake worth $44.9 million reported as of the end of March. Trailing Omega Advisors was Arrowstreet Capital, which amassed a stake valued at $42.8 million. D E Shaw, AQR Capital Management, and Portolan 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 Omega Advisors allocated the biggest weight to Navient Corp (NASDAQ:NAVI), around 2.8% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, designating 0.88 percent of its 13F equity portfolio to NAVI.

Since Navient Corp (NASDAQ:NAVI) has experienced a decline in interest from hedge fund managers, we can see that there lies a certain “tier” of hedgies that decided to sell off their positions entirely by the end of the first quarter. Intriguingly, Parag Vora’s HG Vora Capital Management cut the largest position of the “upper crust” of funds watched by Insider Monkey, comprising about $34.4 million in stock, and George Soros’s Soros Fund Management was right behind this move, as the fund cut about $5.1 million worth. These transactions are important to note, as total hedge fund interest was cut by 5 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Navient Corp (NASDAQ:NAVI) but similarly valued. We will take a look at Tronox Holdings Plc (NYSE:TROX), Moog Inc (NYSE:MOG), Primo Water Corporation (NYSE:PRMW), Amicus Therapeutics, Inc. (NASDAQ:FOLD), BRP Group, Inc. (NASDAQ:BRP), Cimpress plc (NASDAQ:CMPR), and Mimecast Limited (NASDAQ:MIME). This group of stocks’ market valuations are similar to NAVI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TROX 36 320134 11
MOG 21 165294 0
PRMW 32 654281 0
FOLD 30 784712 -7
BRP 12 114604 -8
CMPR 21 306977 -2
MIME 24 221415 -4
Average 25.1 366774 -1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $367 million. That figure was $223 million in NAVI’s case. Tronox Holdings Plc (NYSE:TROX) is the most popular stock in this table. On the other hand BRP Group, Inc. (NASDAQ:BRP) is the least popular one with only 12 bullish hedge fund positions. Navient Corp (NASDAQ:NAVI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NAVI is 41.1. 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. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on NAVI as the stock returned 40.5% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.

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