Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: NVIDIA Corporation (NASDAQ:NVDA).
NVIDIA Corporation (NASDAQ:NVDA) investors should pay attention to an increase in hedge fund interest in recent months. Our calculations also showed that NVDA isn’t among the 30 most popular stocks among hedge funds (see the video at the end of this article).
To most traders, hedge funds are seen as underperforming, outdated financial tools of yesteryear. While there are over 8000 funds trading at present, Our researchers hone in on the bigwigs of this group, about 750 funds. These investment experts direct bulk of all hedge funds’ total asset base, and by observing their unrivaled stock picks, Insider Monkey has come up with numerous investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the new hedge fund action surrounding NVIDIA Corporation (NASDAQ:NVDA).
Hedge fund activity in NVIDIA Corporation (NASDAQ:NVDA)
At the end of the second quarter, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the previous quarter. On the other hand, there were a total of 57 hedge funds with a bullish position in NVDA a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the largest position in NVIDIA Corporation (NASDAQ:NVDA). D E Shaw has a $642.3 million position in the stock, comprising 0.8% of its 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $411.7 million call position; 0.2% of its 13F portfolio is allocated to the stock. Other peers that are bullish contain David Blood and Al Gore’s Generation Investment Management, Andreas Halvorsen’s Viking Global and Ken Griffin’s Citadel Investment Group.
Consequently, some big names were breaking ground themselves. Renaissance Technologies, founded by billionaire Jim Simons, initiated the largest position in NVIDIA Corporation (NASDAQ:NVDA). Renaissance Technologies had $102 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $65.7 million position during the quarter. The other funds with brand new NVDA positions are Jeffrey Talpins’s Element Capital Management and Gilchrist Berg’s Water Street Capital.
Let’s go over hedge fund activity in other stocks similar to NVIDIA Corporation (NASDAQ:NVDA). These stocks are QUALCOMM, Incorporated (NASDAQ:QCOM), General Electric Company (NYSE:GE), Itau Unibanco Holding SA (NYSE:ITUB), and Altria Group Inc (NYSE:MO). This group of stocks’ market valuations match NVDA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QCOM | 61 | 1721699 | 16 |
| GE | 56 | 4499936 | 2 |
| ITUB | 18 | 1084984 | -3 |
| MO | 38 | 942106 | 2 |
| Average | 43.25 | 2062181 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.25 hedge funds with bullish positions and the average amount invested in these stocks was $2062 million. That figure was $1780 million in NVDA’s case. QUALCOMM, Incorporated (NASDAQ:QCOM) is the most popular stock in this table. On the other hand Itau Unibanco Holding SA (NYSE:ITUB) is the least popular one with only 18 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on NVDA as the stock returned 6.1% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
