Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about New Residential Investment Corp (NYSE:NRZ) in this article.
Is New Residential Investment Corp (NYSE:NRZ) the right pick for your portfolio? The best stock pickers were turning bullish. The number of long hedge fund bets increased by 5 recently. New Residential Investment Corp (NYSE:NRZ) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 33. Our calculations also showed that NRZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 15 hedge funds in our database with NRZ positions at the end of the first quarter.
In today’s marketplace there are many tools stock market investors employ to assess stocks. A duo of the most under-the-radar tools are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best fund managers can beat the broader indices by a superb margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Ken Fisher of Fisher Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy 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 analyze the key hedge fund action regarding New Residential Investment Corp (NYSE:NRZ).
Do Hedge Funds Think NRZ Is A Good Stock To Buy Now?
At Q2’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NRZ over the last 24 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of New Residential Investment Corp (NYSE:NRZ), with a stake worth $44.4 million reported as of the end of June. Trailing Arrowstreet Capital was Ellington, which amassed a stake valued at $18.6 million. Citadel Investment Group, Two Sigma Advisors, and D E Shaw 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 Ellington allocated the biggest weight to New Residential Investment Corp (NYSE:NRZ), around 2.76% of its 13F portfolio. Mangrove Partners is also relatively very bullish on the stock, designating 0.89 percent of its 13F equity portfolio to NRZ.
As one would reasonably expect, key hedge funds have jumped into New Residential Investment Corp (NYSE:NRZ) headfirst. Ellington, managed by Mike Vranos, created the largest position in New Residential Investment Corp (NYSE:NRZ). Ellington had $18.6 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $13.4 million investment in the stock during the quarter. The other funds with brand new NRZ positions are Dmitry Balyasny’s Balyasny Asset Management, Matthew Hulsizer’s PEAK6 Capital Management, and Ken Fisher’s Fisher Asset Management.
Let’s also examine hedge fund activity in other stocks similar to New Residential Investment Corp (NYSE:NRZ). These stocks are IDACORP Inc (NYSE:IDA), Colliers International Group Inc (NASDAQ:CIGI), Watts Water Technologies Inc (NYSE:WTS), International Game Technology PLC (NYSE:IGT), PacWest Bancorp (NASDAQ:PACW), United Bankshares, Inc. (NASDAQ:UBSI), and Cirrus Logic, Inc. (NASDAQ:CRUS). This group of stocks’ market values match NRZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IDA | 15 | 77067 | -2 |
| CIGI | 17 | 825694 | 3 |
| WTS | 18 | 471866 | 0 |
| IGT | 32 | 326678 | -5 |
| PACW | 29 | 593770 | -2 |
| UBSI | 9 | 21024 | 0 |
| CRUS | 29 | 450723 | 3 |
| Average | 21.3 | 395260 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $395 million. That figure was $130 million in NRZ’s case. International Game Technology PLC (NYSE:IGT) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 9 bullish hedge fund positions. New Residential Investment Corp (NYSE:NRZ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NRZ is 52.1. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on NRZ as the stock returned 13.2% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
