Hedge Funds Are Buying Nelnet, Inc. (NNI)

What’s a smart Nelnet, Inc. (NYSE:NNI) investor to do?

At the moment, there are tons of gauges investors can use to monitor the equity markets. Some of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best fund managers can trounce the broader indices by a superb amount (see just how much).

Equally as crucial, bullish insider trading sentiment is a second way to look at the stock market universe. There are a number of motivations for a bullish insider to downsize shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the valuable potential of this strategy if “monkeys” understand what to do (learn more here).

Now that that’s out of the way, it’s important to analyze the recent info for Nelnet, Inc. (NYSE:NNI).

How are hedge funds trading Nelnet, Inc. (NYSE:NNI)?

At the end of the second quarter, a total of 16 of the hedge funds we track were long in this stock, a change of 7% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly.

When using filings from the hedgies we track, Amy Minella’s Cardinal Capital had the most valuable position in Nelnet, Inc. (NYSE:NNI), worth close to $27 million, accounting for 1.7% of its total 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which held a $25.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Cliff Asness’s AQR Capital Management, David Dreman’s Dreman Value Management and Jim Simons’s Renaissance Technologies.

As industrywide interest increased, specific money managers have jumped into Nelnet, Inc. (NYSE:NNI) headfirst. Cardinal Capital, managed by Amy Minella, established the most outsized position in Nelnet, Inc. (NYSE:NNI). Cardinal Capital had 27 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $25.2 million position during the quarter. The following funds were also among the new NNI investors: Cliff Asness’s AQR Capital Management, David Dreman’s Dreman Value Management, and Jim Simons’s Renaissance Technologies.

What do corporate executives and insiders think about Nelnet, Inc. (NYSE:NNI)?

Insider buying made by high-level executives is most useful when the primary stock in question has seen transactions within the past six months. Over the last six-month time frame, Nelnet, Inc. (NYSE:NNI) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Nelnet, Inc. (NYSE:NNI). These stocks are World Acceptance Corp. (NASDAQ:WRLD), CapitalSource, Inc. (NYSE:CSE), PHH Corporation (NYSE:PHH), First Cash Financial Services, Inc. (NASDAQ:FCFS), and Cash America International, Inc. (NYSE:CSH). This group of stocks belong to the credit services industry and their market caps are closest to NNI’s market cap.

Using the returns shown by Insider Monkey’s research, regular investors should always pay attention to hedge fund and insider trading activity, and Nelnet, Inc. (NYSE:NNI) applies perfectly to this mantra.

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