The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards National Instruments Corporation (NASDAQ:NATI), and what that likely means for the prospects of the company and its stock.
National Instruments Corporation (NASDAQ:NATI) was in 29 hedge funds’ portfolios at the end of December. NATI investors should pay attention to an increase in hedge fund sentiment recently. There were 24 hedge funds in our database with NATI positions at the end of the previous quarter. Overall hedge fund sentiment towards NATI is at its all time high. This is usually a bullish sign. For example hedge fund sentiment in Xilinx Inc. (XLNX) was also at its all time high at the beginning of this year and the stock returned more than 46% in 2.5 months. We observed similar performances from OKTA, Twilio, MSCI and Progressive Corporation (PGR); these stocks returned 37%, 37%, 29% and 27% respectively. Hedge fund sentiment towards IQVIA Holdings Inc. (IQV), Brookfield Asset Management (BAM), Atlassian Corporation (TEAM), RCL, MTB, VAR, RNG and CRH hit all time highs at the end of December, and all of these stocks returned more than 20% in the first 2.5-3 months of this year.
At the moment there are many signals stock traders have at their disposal to value their holdings. A couple of the most innovative signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the top fund managers can trounce the market by a superb amount (see the details here).
We’re going to take a gander at the latest hedge fund action encompassing National Instruments Corporation (NASDAQ:NATI).
Hedge fund activity in National Instruments Corporation (NASDAQ:NATI)
Heading into the first quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in NATI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in National Instruments Corporation (NASDAQ:NATI) was held by Bares Capital Management, which reported holding $201.4 million worth of stock at the end of September. It was followed by Royce & Associates with a $89.5 million position. Other investors bullish on the company included Praesidium Investment Management Company, Millennium Management, and Citadel Investment Group.
Now, key hedge funds were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, established the most outsized position in National Instruments Corporation (NASDAQ:NATI). Renaissance Technologies had $8.5 million invested in the company at the end of the quarter. John Orrico’s Water Island Capital also initiated a $4 million position during the quarter. The following funds were also among the new NATI investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Tudor Jones’s Tudor Investment Corp, and David Costen Haley’s HBK Investments.
Let’s now review hedge fund activity in other stocks similar to National Instruments Corporation (NASDAQ:NATI). We will take a look at Foot Locker, Inc. (NYSE:FL), Carlisle Companies, Inc. (NYSE:CSL), Pool Corporation (NASDAQ:POOL), and Vectren Corporation (NYSE:VVC). This group of stocks’ market valuations match NATI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FL | 35 | 878761 | 9 |
| CSL | 21 | 340572 | -1 |
| POOL | 17 | 242228 | 0 |
| VVC | 23 | 731051 | 4 |
| Average | 24 | 548153 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $548 million. That figure was $549 million in NATI’s case. Foot Locker, Inc. (NYSE:FL) is the most popular stock in this table. On the other hand Pool Corporation (NASDAQ:POOL) is the least popular one with only 17 bullish hedge fund positions. National Instruments Corporation (NASDAQ:NATI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately NATI wasn’t in this group. Hedge funds that bet on NATI were disappointed as the stock returned 3.1% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 12 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
