The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Northern Trust Corporation (NASDAQ:NTRS).
Is Northern Trust Corporation (NASDAQ:NTRS) undervalued? Prominent investors were reducing their bets on the stock. The number of long hedge fund positions decreased by 3 lately. Northern Trust Corporation (NASDAQ:NTRS) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 37. Our calculations also showed that NTRS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Clint Carlson of Carlson Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. 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. Now let’s take a look at the fresh hedge fund action surrounding Northern Trust Corporation (NASDAQ:NTRS).
Do Hedge Funds Think NTRS Is A Good Stock To Buy Now?
At the end of March, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NTRS over the last 23 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
More specifically, Ariel Investments was the largest shareholder of Northern Trust Corporation (NASDAQ:NTRS), with a stake worth $186.2 million reported as of the end of March. Trailing Ariel Investments was GAMCO Investors, which amassed a stake valued at $30.6 million. Citadel Investment Group, Adage Capital Management, and Levin Capital Strategies 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 Global Frontier Investments allocated the biggest weight to Northern Trust Corporation (NASDAQ:NTRS), around 2.72% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, designating 1.83 percent of its 13F equity portfolio to NTRS.
Judging by the fact that Northern Trust Corporation (NASDAQ:NTRS) has witnessed declining sentiment from the smart money, we can see that there was a specific group of money managers who were dropping their positions entirely last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest investment of the 750 funds watched by Insider Monkey, worth about $40.1 million in stock, and Renaissance Technologies was right behind this move, as the fund said goodbye to about $4.7 million worth. These moves are important to note, as total hedge fund interest dropped by 3 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Northern Trust Corporation (NASDAQ:NTRS) but similarly valued. We will take a look at Royal Caribbean Cruises Ltd. (NYSE:RCL), Hess Corporation (NYSE:HES), Cloudflare, Inc. (NYSE:NET), Fresenius Medical Care AG & Co. (NYSE:FMS), CarMax Inc (NYSE:KMX), Kellogg Company (NYSE:K), and Futu Holdings Limited (NASDAQ:FUTU). This group of stocks’ market values resemble NTRS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RCL | 42 | 594423 | 5 |
| HES | 26 | 556388 | -7 |
| NET | 45 | 792469 | -15 |
| FMS | 12 | 10933 | 3 |
| KMX | 46 | 2030896 | 0 |
| K | 32 | 557204 | -5 |
| FUTU | 26 | 1014997 | 9 |
| Average | 32.7 | 793901 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $794 million. That figure was $348 million in NTRS’s case. CarMax Inc (NYSE:KMX) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (NYSE:FMS) is the least popular one with only 12 bullish hedge fund positions. Northern Trust Corporation (NASDAQ:NTRS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NTRS is 48.2. 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 24% in 2021 through July 9th and beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on NTRS, though not to the same extent, as the stock returned 10.6% since the end of Q1 (through July 9th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
