It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like NCR Corporation (NYSE:NCR).
Is NCR Corporation (NYSE:NCR) worth your attention right now? Money managers are in a pessimistic mood. The number of bullish hedge fund bets were trimmed by 2 in recent months. At the end of this article, we will also compare NCR Corporation (NYSE:NCR) to other stocks, including Molina Healthcare, Inc. (NYSE:MOH), AmeriGas Partners, L.P. (NYSE:APU), and Burlington Stores Inc (NYSE:BURL) to get a better sense of its popularity.
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In the eyes of most stock holders, hedge funds are viewed as unimportant, old financial vehicles of years past. While there are more than 8000 funds in operation today, we look at the upper echelon of this club, around 700 funds. These investment experts orchestrate the lion’s share of the hedge fund industry’s total capital, and by tailing their top stock picks, Insider Monkey has deciphered various investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Now, we’re going to review the fresh action surrounding NCR Corporation (NYSE:NCR).
How are hedge funds trading NCR Corporation (NYSE:NCR)?
Heading into Q4, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 5% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Richard McGuire’s Marcato Capital Management has the number one position in NCR Corporation (NYSE:NCR), worth close to $246.8 million, corresponding to 12.4% of its total 13F portfolio. The second largest stake is held by Iridian Asset Management, managed by David Cohen and Harold Levy, which holds a $162.8 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism include Jason Karp’s Tourbillon Capital Partners, D E Shaw and Marc Majzner’s Clearline Capital.
Seeing as NCR Corporation (NYSE:NCR) has faced falling interest from the smart money, it’s safe to say that there lies a certain “tier” of hedge funds that slashed their full holdings by the end of the third quarter. It’s worth mentioning that Barry Rosenstein’s JANA Partners dumped the largest stake of the 700 funds watched by Insider Monkey, totaling about $231.9 million in call options., and Jason Karp’s Tourbillon Capital Partners was right behind this move, as the fund said goodbye to about $52.7 million worth of shares. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as NCR Corporation (NYSE:NCR) but similarly valued. We will take a look at Molina Healthcare, Inc. (NYSE:MOH), AmeriGas Partners, L.P. (NYSE:APU), Burlington Stores Inc (NYSE:BURL), and Booz Allen Hamilton Holding Corporation (NYSE:BAH). This group of stocks’ market values matches NCR Corporation (NYSE:NCR)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOH | 30 | 443900 | 2 |
| APU | 8 | 14884 | 1 |
| BURL | 39 | 771880 | 1 |
| BAH | 15 | 152198 | -8 |
As you can see, these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $346 million. That figure was $1.02 billion in NCR Corporation (NYSE:NCR)’s case. Burlington Stores Inc (NYSE:BURL) is the most popular stock in this table. On the other hand, AmeriGas Partners, L.P. (NYSE:APU) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks, NCR Corporation (NYSE:NCR) 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.
