Should You Buy Nestle SA (NSRGY)?

We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Nestle SA (OTCMKTS:NSRGY) based on that data.

Hedge fund interest in Nestle SA (OTCMKTS:NSRGY) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare NSRGY to other stocks including The Procter & Gamble Company (NYSE:PG), Exxon Mobil Corporation (NYSE:XOM), and AT&T Inc. (NYSE:T) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most shareholders, hedge funds are perceived as worthless, old financial tools of the past. While there are greater than 8000 funds in operation at present, We hone in on the bigwigs of this club, approximately 750 funds. These money managers direct bulk of the smart money’s total capital, and by monitoring their matchless picks, Insider Monkey has spotted a number of investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .


Ken Fisher of Fisher Asset Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s view the new hedge fund action regarding Nestle SA (OTCMKTS:NSRGY).

Hedge fund activity in Nestle SA (OTCMKTS:NSRGY)

Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NSRGY over the last 17 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Is NSRGY A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Gardner Russo & Gardner, managed by Tom Russo, holds the most valuable position in Nestle SA (OTCMKTS:NSRGY). Gardner Russo & Gardner has a $1.4132 billion position in the stock, comprising 11% of its 13F portfolio. Coming in second is Fisher Asset Management, led by Ken Fisher, holding a $396.9 million position; 0.4% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions encompass Scott Wallace’s Wallace Capital Management, Ed Beddow and William Tichy’s Beddow Capital Management and . In terms of the portfolio weights assigned to each position Gardner Russo & Gardner allocated the biggest weight to Nestle SA (OTCMKTS:NSRGY), around 11% of its 13F portfolio. Beddow Capital Management is also relatively very bullish on the stock, earmarking 4.39 percent of its 13F equity portfolio to NSRGY.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now review hedge fund activity in other stocks similar to Nestle SA (OTCMKTS:NSRGY). These stocks are The Procter & Gamble Company (NYSE:PG), Exxon Mobil Corporation (NYSE:XOM), AT&T Inc. (NYSE:T), and Mastercard Incorporated (NYSE:MA). All of these stocks’ market caps are similar to NSRGY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PG 66 11536685 8
XOM 48 1365038 -2
T 46 1515476 4
MA 114 13206727 15
Average 68.5 6905982 6.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 68.5 hedge funds with bullish positions and the average amount invested in these stocks was $6906 million. That figure was $1832 million in NSRGY’s case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand AT&T Inc. (NYSE:T) is the least popular one with only 46 bullish hedge fund positions. Compared to these stocks Nestle SA (OTCMKTS:NSRGY) is even less popular than T. Hedge funds dodged a bullet by taking a bearish stance towards NSRGY. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NSRGY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NSRGY investors were disappointed as the stock returned -4.1% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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