In this article we will analyze whether NL Industries, Inc. (NYSE:NL) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
NL Industries, Inc. (NYSE:NL) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 5. NL investors should be aware of an increase in hedge fund interest lately. There were 1 hedge funds in our database with NL holdings at the end of December. Our calculations also showed that NL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Nierenberg of Nierenberg Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to go over the latest hedge fund action regarding NL Industries, Inc. (NYSE:NL).
Do Hedge Funds Think NL Is A Good Stock To Buy Now?
At first quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 200% from the fourth quarter of 2020. On the other hand, there were a total of 3 hedge funds with a bullish position in NL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in NL Industries, Inc. (NYSE:NL) was held by Renaissance Technologies, which reported holding $1.6 million worth of stock at the end of December. It was followed by Nierenberg Investment Management with a $0.2 million position. The only other hedge fund that is bullish on the company was Bailard Inc.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Nierenberg Investment Management, managed by David Nierenberg, established the biggest position in NL Industries, Inc. (NYSE:NL). Nierenberg Investment Management had $0.2 million invested in the company at the end of the quarter. Thomas Bailard’s Bailard Inc also made a $0.1 million investment in the stock during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as NL Industries, Inc. (NYSE:NL) but similarly valued. We will take a look at American National BankShares Inc (NASDAQ:AMNB), Laredo Petroleum Inc (NYSE:LPI), 9F Inc. (NASDAQ:JFU), Atlas Technical Consultants, Inc. (NASDAQ:ATCX), Immunome, Inc. (NASDAQ:IMNM), Ooma Inc (NYSE:OOMA), and ProQR Therapeutics NV (NASDAQ:PRQR). All of these stocks’ market caps are closest to NL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMNB | 3 | 5471 | 0 |
| LPI | 14 | 38152 | 4 |
| JFU | 4 | 851 | 1 |
| ATCX | 8 | 35663 | 1 |
| IMNM | 1 | 11248 | -2 |
| OOMA | 14 | 114359 | -1 |
| PRQR | 18 | 100912 | 9 |
| Average | 8.9 | 43808 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.9 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $2 million in NL’s case. ProQR Therapeutics NV (NASDAQ:PRQR) is the most popular stock in this table. On the other hand Immunome, Inc. (NASDAQ:IMNM) is the least popular one with only 1 bullish hedge fund positions. NL Industries, Inc. (NYSE:NL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NL is 30.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately NL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NL investors were disappointed as the stock returned 4.2% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
