Did Hedge Funds Make The Right Call On National Storage Affiliates Trust (NSA)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtNational Storage Affiliates Trust (NYSE:NSA) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is National Storage Affiliates Trust (NYSE:NSA) going to take off soon? Investors who are in the know were becoming more confident. The number of bullish hedge fund bets increased by 7 lately. Our calculations also showed that NSA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Harding of Winton Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s take a look at the new hedge fund action encompassing National Storage Affiliates Trust (NYSE:NSA).

What does smart money think about National Storage Affiliates Trust (NYSE:NSA)?

At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 64% from the fourth quarter of 2019. On the other hand, there were a total of 16 hedge funds with a bullish position in NSA a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

The largest stake in National Storage Affiliates Trust (NYSE:NSA) was held by Renaissance Technologies, which reported holding $54.7 million worth of stock at the end of September. It was followed by Winton Capital Management with a $7.9 million position. Other investors bullish on the company included Millennium Management, Two Sigma Advisors, and D E Shaw. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to National Storage Affiliates Trust (NYSE:NSA), around 0.27% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, setting aside 0.24 percent of its 13F equity portfolio to NSA.

As one would reasonably expect, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in National Storage Affiliates Trust (NYSE:NSA). Citadel Investment Group had $1.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.6 million position during the quarter. The other funds with brand new NSA positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Hoon Kim’s Quantinno Capital, and Greg Eisner’s Engineers Gate Manager.

Let’s go over hedge fund activity in other stocks similar to National Storage Affiliates Trust (NYSE:NSA). These stocks are Fitbit Inc (NYSE:FIT), Rogers Corporation (NYSE:ROG), Vonage Holdings Corp. (NASDAQ:VG), and BankUnited Inc (NYSE:BKU). This group of stocks’ market caps are similar to NSA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $77 million in NSA’s case. Fitbit Inc (NYSE:FIT) is the most popular stock in this table. On the other hand BankUnited Inc (NYSE:BKU) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks National Storage Affiliates Trust (NYSE:NSA) is even less popular than BKU. Hedge funds dodged a bullet by taking a bearish stance towards NSA. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th but managed to beat the market by 17.1 percentage points. Unfortunately NSA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); NSA investors were disappointed as the stock returned 0.2% since Q1 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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