Should You Buy Noble Corporation Ordinary Shares (UK) (NE)?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Noble Corporation Ordinary Shares (UK) (NYSE:NE).

Noble Corporation Ordinary Shares (UK) (NYSE:NE) was in 34 hedge funds’ portfolios at the end of September. NE shareholders have witnessed an increase in hedge fund sentiment in recent months. There were 33 hedge funds in our database with NE holdings at the end of the previous quarter. At the end of this article we will also compare NE to other stocks including MicroStrategy Incorporated (NASDAQ:MSTR), Rexnord Corp (NYSE:RXN), and Watts Water Technologies Inc (NYSE:WTS) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Keeping this in mind, let’s take a gander at the new action encompassing Noble Corporation Ordinary Shares (UK) (NYSE:NE).

What have hedge funds been doing with Noble Corporation Ordinary Shares (UK) (NYSE:NE)?

At Q3’s end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the second quarter of 2016. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Alyeska Investment Group, managed by Anand Parekh, holds the most valuable position in Noble Corporation Ordinary Shares (UK) (NYSE:NE). Alyeska Investment Group has a $57.9 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Firefly Value Partners, managed by Ryan Heslop and Ariel Warszawski, which holds a $42 million position; the fund has 5.8% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions comprise Paul Marshall and Ian Wace’s Marshall Wace LLP, and Ray Dalio’s Bridgewater Associates.

As one would reasonably expect, some big names have jumped into Noble Corporation Ordinary Shares (UK) (NYSE:NE) headfirst. Elliott Management, managed by Paul Singer, established the most valuable call position in Noble Corporation Ordinary Shares (UK) (NYSE:NE). Elliott Management had $17.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $6.3 million position during the quarter. The other funds with new positions in the stock are Zach Schreiber’s Point State Capital, Lee Ainslie’s Maverick Capital, and Arvind Sanger’s GeoSphere Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Noble Corporation Ordinary Shares (UK) (NYSE:NE). We will take a look at MicroStrategy Incorporated (NASDAQ:MSTR), Rexnord Corp (NYSE:RXN), Watts Water Technologies Inc (NYSE:WTS), and Pretium Resources Inc (NYSE:PVG). All of these stocks’ market caps are closest to NE’s market cap.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $268 million. That figure was $278 million in NE’s case. MicroStrategy Incorporated (NASDAQ:MSTR) is the most popular stock in this table. On the other hand Watts Water Technologies Inc (NYSE:WTS) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Noble Corporation Ordinary Shares (UK) (NYSE:NE) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.