Hedge Funds Are Selling Nasdaq, Inc. (NDAQ)

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Nasdaq, Inc. (NASDAQ:NDAQ).

Is Nasdaq, Inc. (NASDAQ:NDAQ) a bargain? The best stock pickers were in a pessimistic mood. The number of long hedge fund positions went down by 2 lately. Nasdaq, Inc. (NASDAQ:NDAQ) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 32. Our calculations also showed that NDAQ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind we’re going to take a gander at the latest hedge fund action regarding Nasdaq, Inc. (NASDAQ:NDAQ).

Peter Rathjens of Arrowstreet Capital

Do Hedge Funds Think NDAQ Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in NDAQ a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, Arrowstreet Capital held the most valuable stake in Nasdaq, Inc. (NASDAQ:NDAQ), which was worth $68.6 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $49.1 million worth of shares. Citadel Investment Group, Gillson Capital, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Columbus Point allocated the biggest weight to Nasdaq, Inc. (NASDAQ:NDAQ), around 6.28% of its 13F portfolio. Thames Capital Management is also relatively very bullish on the stock, earmarking 3.01 percent of its 13F equity portfolio to NDAQ.

Due to the fact that Nasdaq, Inc. (NASDAQ:NDAQ) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few funds who were dropping their entire stakes in the third quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management dumped the largest position of the “upper crust” of funds tracked by Insider Monkey, worth close to $17.2 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dumped its stock, about $10.2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Nasdaq, Inc. (NASDAQ:NDAQ). We will take a look at Cummins Inc. (NYSE:CMI), Barrick Gold Corporation (NYSE:GOLD), Rocket Companies, Inc. (NYSE:RKT), Mettler-Toledo International Inc. (NYSE:MTD), HubSpot Inc (NYSE:HUBS), HP Inc. (NYSE:HPQ), and The Williams Companies, Inc. (NYSE:WMB). This group of stocks’ market values are similar to NDAQ’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.4 hedge funds with bullish positions and the average amount invested in these stocks was $1075 million. That figure was $257 million in NDAQ’s case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand Rocket Companies, Inc. (NYSE:RKT) is the least popular one with only 17 bullish hedge fund positions. Nasdaq, Inc. (NASDAQ:NDAQ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NDAQ is 29.1. 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. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on NDAQ as the stock returned 9.1% since the end of the third quarter (through 12/31) and outperformed the market by an even larger margin.

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