Hedge Funds Are Selling Neustar Inc (NSR)

How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Neustar Inc (NYSE:NSR).

Neustar Inc has seen a decrease in activity from the world’s largest hedge funds lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as International Speedway Corporation (NASDAQ:ISCA), Insulet Corporation (NASDAQ:PODD), and Carpenter Technology Corporation (NYSE:CRS) to gather more data points.

At the moment there are a multitude of gauges shareholders use to size up stocks. A pair of the best gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outperform the broader indices by a healthy amount (see the details here).

With all of this in mind, we’re going to analyze the new action regarding Neustar Inc (NYSE:NSR).

How have hedgies been trading Neustar Inc (NYSE:NSR)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Gotham Asset Management, managed by Joel Greenblatt, holds the largest position in Neustar Inc (NYSE:NSR). Gotham Asset Management has a $34.9 million position in the stock, comprising 0.3% of its 13F portfolio. On Gotham Asset Management’s heels is Goodnow Investment Group, led by Edward Goodnow, holding a $27.5 million position; the fund has 5.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish contain Jeffrey Bronchick’s Cove Street Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Peter S. Park’s Park West Asset Management.

Seeing as Neustar Inc (NYSE:NSR) has witnessed bearish sentiment from hedge fund managers, logic holds that there was a specific group of fund managers that decided to sell off their positions entirely heading into Q4. At the top of the heap, Bruce Kovner’s Caxton Associates LP said goodbye to the largest investment of all the hedgies watched by Insider Monkey, worth an estimated $5.6 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund said goodbye to about $2.8 million worth of shares. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Neustar Inc (NYSE:NSR). These stocks are International Speedway Corporation (NASDAQ:ISCA), Insulet Corporation (NASDAQ:PODD), Carpenter Technology Corporation (NYSE:CRS), and Cardtronics, Inc. (NASDAQ:CATM). All of these stocks’ market caps resemble NSR’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $192 million. That figure was $135 million in NSR’s case. Insulet Corporation (NASDAQ:PODD) is the most popular stock in this table with a total of 18 funds owning shares as of September 30. On the other hand International Speedway Corporation (NASDAQ:ISCA) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Neustar Inc (NYSE:NSR) 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.