What Does Hedge Fund Sentiment Say About NetApp Inc. (NTAP)?

Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30. What do these smart investors think about NetApp Inc. (NASDAQ:NTAP)?

Hedge fund interest in NetApp Inc. (NASDAQ:NTAP) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Masco Corporation (NYSE:MAS), Advanced Semiconductor Engineering (ADR) (NYSE:ASX), and LKQ Corporation (NASDAQ:LKQ) to gather more data points.

In today’s marketplace there are a lot of formulas stock traders use to analyze publicly traded companies. A couple of the less known formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can beat the broader indices by a healthy margin (see the details here).

Now, let’s take a look at the fresh action surrounding NetApp Inc. (NASDAQ:NTAP).

Hedge fund activity in NetApp Inc. (NASDAQ:NTAP)

At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, flat from the second quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies holds the largest position in NetApp Inc. (NASDAQ:NTAP). Renaissance Technologies has a $48.3 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is AQR Capital Management, managed by Cliff Asness, which holds a $44.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of David Harding’s Winton Capital Management, Ahmet Okumus’ Okumus Fund Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Since NetApp Inc. (NASDAQ:NTAP) has experienced a decline in interest from hedge fund managers, logic holds that there were a few fund managers who sold off their entire stakes in the third quarter. At the top of the heap, Joel Greenblatt’s Gotham Asset Management dropped the biggest investment of the 700 funds tracked by Insider Monkey, totaling an estimated $33.9 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its stock, about $10.1 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NetApp Inc. (NASDAQ:NTAP) but similarly valued. These stocks are Masco Corporation (NYSE:MAS), Advanced Semiconductor Engineering (ADR) (NYSE:ASX), LKQ Corporation (NASDAQ:LKQ), and Western Gas Equity Partners LP (NYSE:WGP). This group of stocks’ market values are similar to NTAP’s market value.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $545 million. That figure was $318 million in NTAP’s case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand Western Gas Equity Partners LP (NYSE:WGP) is the least popular one with only 9 bullish hedge fund positions. NetApp Inc. (NASDAQ:NTAP) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MAS might be a better candidate to consider a long position.