Coronavirus is probably the #1 concern in investors’ minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards NVIDIA Corporation (NASDAQ:NVDA).
Is NVIDIA Corporation (NASDAQ:NVDA) a good investment now? The best stock pickers are taking a bullish view. The number of bullish hedge fund positions moved up by 23 recently. Our calculations also showed that NVDA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). NVDA was in 79 hedge funds’ portfolios at the end of December. There were 56 hedge funds in our database with NVDA holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind let’s take a look at the latest hedge fund action encompassing NVIDIA Corporation (NASDAQ:NVDA).
How have hedgies been trading NVIDIA Corporation (NASDAQ:NVDA)?
Heading into the first quarter of 2020, a total of 79 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 41% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards NVDA over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in NVIDIA Corporation (NASDAQ:NVDA), which was worth $833.7 million at the end of the third quarter. On the second spot was GQG Partners which amassed $572.3 million worth of shares. Citadel Investment Group, Coatue Management, and Fisher Asset Management 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 Atreides Management allocated the biggest weight to NVIDIA Corporation (NASDAQ:NVDA), around 7.64% of its 13F portfolio. AlphaOne Capital Partners is also relatively very bullish on the stock, setting aside 5.37 percent of its 13F equity portfolio to NVDA.
As one would reasonably expect, some big names have jumped into NVIDIA Corporation (NASDAQ:NVDA) headfirst. GQG Partners, managed by Rajiv Jain, established the most valuable position in NVIDIA Corporation (NASDAQ:NVDA). GQG Partners had $572.3 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $100.7 million investment in the stock during the quarter. The other funds with brand new NVDA positions are Michael Rockefeller and Karl Kroeker’s Woodline Partners, Mikal Patel’s Oribel Capital Management, and Gavin Baker’s Atreides Management.
Let’s check out hedge fund activity in other stocks similar to NVIDIA Corporation (NASDAQ:NVDA). These stocks are Amgen, Inc. (NASDAQ:AMGN), TOTAL S.A. (NYSE:TOT), Netflix, Inc. (NASDAQ:NFLX), and BHP Billiton Limited (NYSE:BHP). This group of stocks’ market caps resemble NVDA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMGN | 58 | 2290267 | 3 |
| TOT | 17 | 1195776 | -1 |
| NFLX | 114 | 13080883 | 11 |
| BHP | 20 | 886421 | -4 |
| Average | 52.25 | 4363337 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 52.25 hedge funds with bullish positions and the average amount invested in these stocks was $4363 million. That figure was $3179 million in NVDA’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand TOTAL S.A. (NYSE:TOT) is the least popular one with only 17 bullish hedge fund positions. NVIDIA Corporation (NASDAQ:NVDA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Hedge funds were also right about betting on NVDA as the stock returned 17.6% during the first quarter (through March 2nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
