At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Nice Systems Ltd (NASDAQ:NICE) was in 15 hedge funds’ portfolios at the end of the fourth quarter of 2018. NICE has experienced an increase in enthusiasm from smart money of late. There were 14 hedge funds in our database with NICE holdings at the end of the previous quarter. Our calculations also showed that NICE isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s view the recent hedge fund action surrounding Nice Systems Ltd (NASDAQ:NICE).
How are hedge funds trading Nice Systems Ltd (NASDAQ:NICE)?
At the end of the fourth quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in NICE a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Nice Systems Ltd (NASDAQ:NICE) was held by Arrowstreet Capital, which reported holding $63.7 million worth of stock at the end of September. It was followed by RGM Capital with a $49.9 million position. Other investors bullish on the company included HMI Capital, Arrowgrass Capital Partners, and Fisher Asset Management.
Now, specific money managers have been driving this bullishness. RGM Capital, managed by Robert G. Moses, assembled the largest position in Nice Systems Ltd (NASDAQ:NICE). RGM Capital had $49.9 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $4.8 million investment in the stock during the quarter. The other funds with brand new NICE positions are Thomas Bailard’s Bailard Inc, Ken Griffin’s Citadel Investment Group, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Nice Systems Ltd (NASDAQ:NICE) but similarly valued. We will take a look at Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), Tilray, Inc. (NASDAQ:TLRY), Brookfield Property Partners LP (NASDAQ:BPY), and Pentair plc (NYSE:PNR). All of these stocks’ market caps are closest to NICE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVAL | 9 | 17834 | 3 |
| TLRY | 8 | 203753 | -1 |
| BPY | 8 | 86346 | -3 |
| PNR | 25 | 645162 | 1 |
| Average | 12.5 | 238274 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $238 million. That figure was $193 million in NICE’s case. Pentair plc (NYSE:PNR) is the most popular stock in this table. On the other hand Tilray, Inc. (NASDAQ:TLRY) is the least popular one with only 8 bullish hedge fund positions. Nice Systems Ltd (NASDAQ:NICE) 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 NICE wasn’t in this group. Hedge funds that bet on NICE were disappointed as the stock returned 14.2% 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.
