Is Northern Trust Corporation (NASDAQ:NTRS) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Northern Trust Corporation (NASDAQ:NTRS) investors should pay attention to a decrease in enthusiasm from smart money recently. NTRS was in 22 hedge funds’ portfolios at the end of the third quarter of 2015. There were 30 hedge funds in our database with NTRS holdings at the end of the previous quarter. At the end of this article we will also compare NTRS to other stocks including Liberty Interactive Corp (NASDAQ:QVCA), International Paper Company (NYSE:IP), and Roper Industries, Inc. (NYSE:ROP) to get a better sense of its popularity.
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With all of this in mind, we’re going to view the new action regarding Northern Trust Corporation (NASDAQ:NTRS).
How have hedgies been trading Northern Trust Corporation (NASDAQ:NTRS)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -27% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the most valuable position in Northern Trust Corporation (NASDAQ:NTRS), worth close to $87.5 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is GAMCO Investors, led by Mario Gabelli, holding a $78.8 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining peers with similar optimism encompass Phill Gross and Robert Atchinson’s Adage Capital Management, John A. Levin’s Levin Capital Strategies and Cliff Asness’ AQR Capital Management.
Judging by the fact that Northern Trust Corporation (NASDAQ:NTRS) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of money managers who sold off their entire stakes by the end of the third quarter. Intriguingly, James Parsons’s Junto Capital Management said goodbye to the largest position of all the hedgies followed by Insider Monkey, valued at close to $35.2 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also said goodbye to its stock, about $27.4 million worth. These transactions are interesting, as total hedge fund interest fell by 8 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Northern Trust Corporation (NASDAQ:NTRS). We will take a look at Liberty Interactive Corp (NASDAQ:QVCA), International Paper Company (NYSE:IP), Roper Industries, Inc. (NYSE:ROP), and Amphenol Corporation (NYSE:APH). 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 |
|---|---|---|---|
| QVCA | 67 | 4220735 | -4 |
| IP | 32 | 567135 | -3 |
| ROP | 28 | 683401 | 3 |
| APH | 26 | 433051 | 3 |
As you can see these stocks had an average of 38.25 hedge funds with bullish positions and the average amount invested in these stocks was $1476 million. That figure was $423 million in NTRS’s case. Liberty Interactive Corp (NASDAQ:QVCA) is the most popular stock in this table. On the other hand Amphenol Corporation (NYSE:APH) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Northern Trust Corporation (NASDAQ:NTRS) is even less popular than APH. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
