Do Hedge Funds Love Navistar International Corp (NAV)?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Navistar International Corp (NYSE:NAV) , and what that likely means for the prospects of the company and its stock.

Is Navistar International Corp (NYSE:NAV) a bargain? Hedge funds are in an optimistic mood. The number of bullish hedge fund investments went up by 5 in recent months. NAVwas in 18 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with NAV holdings at the end of the previous quarter. At the end of this article we will also compare NAV to other stocks including Integer Holdings Corporation (NYSE:ITGR), Eros International plc (NYSE:EROS), and ScanSource, Inc. (NASDAQ:SCSC) to get a better sense of its popularity.

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Now, we’re going to take a look at the recent action surrounding Navistar International Corp (NYSE:NAV).

Hedge fund activity in Navistar International Corp (NYSE:NAV)

Heading into the fourth quarter of 2016, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a jump of 38% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards NAV over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Icahn Capital LP, led by Carl Icahn, holds the number one position in Navistar International Corp (NYSE:NAV). According to regulatory filings, the fund has a $372.5 million position in the stock, comprising 1.9% of its 13F portfolio. On Icahn Capital LP’s heels is MHR Fund Management, led by Mark Rachesky, which holds a $371.4 million position; 26.2% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism include Mario Gabelli’s GAMCO Investors, D. E. Shaw’s D E Shaw and Youlia Miteva’s Proxima Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As aggregate interest increased, some big names were leading the bulls’ herd. Balyasny Asset Management, led by Dmitry Balyasny, initiated the biggest position in Navistar International Corp (NYSE:NAV). The fund reportedly had $6.7 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $4.6 million position during the quarter. The other funds with brand new NAV positions are Alexander Mitchell’s Scopus Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Ken Griffin’s Citadel Investment Group.

Let’s check out hedge fund activity in other stocks similar to Navistar International Corp (NYSE:NAV). We will take a look at Integer Holdings Corporation (NYSE:ITGR), Eros International plc (NYSE:EROS), ScanSource, Inc. (NASDAQ:SCSC), and Tennant Company (NYSE:TNC). This group of stocks’ market valuations match NAV’s market valuation.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $977 million in NAV’s case. Integer Holdings Corporation (NYSE:ITGR) is the most popular stock in this table. On the other hand Eros International plc (NYSE:EROS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Navistar International Corp (NYSE:NAV) 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.

Disclosure: none.