Nokia Corporation (ADR) (NYSE:NOK)’s shares are modestly higher in pre-market trading on Tuesday after Reuters published an article about the company’s spending cuts. Investors had previously known that the company was targeting 900 million euros in operating spending cuts, or around $1 billion a year. They didn’t know how management would achieve those promised cuts. However, following the Reuters report, and company union representatives, investors now know that the telecom equipment manufacturer will likely cut anywhere from 10,000 to 15,000 jobs. Although Nokia declined to confirm the total layoff number, the company had said earlier that it would be cutting 1,000 jobs in its home country, and 1,400 in Germany. Nokia currently employs around 104,000 workers worldwide, and a 10,000-15,000 worker cut could lower the company’s morale. Nevertheless, investors look forward to the cost savings from the layoffs and hope the new Nokia can better compete against its competitors and deliver more value for shareholders. Shares of Nokia Corp (ADR) (NYSE:NOK) are down 25% year-to-date so far. Let’s take a look at what hedge funds think about Nokia Corp (ADR) (NYSE:NOK).
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Nokia Corporation (ADR) (NYSE:NOK) was in 20 hedge funds’ portfolios at the end of March. NOK has experienced a decrease in activity from the world’s largest hedge funds lately. There were 26 hedge funds in our database with NOK holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Vale SA (ADR) (NYSE:VALE), Archer Daniels Midland Company (NYSE:ADM), and United Continental Holdings Inc (NYSE:UAL) to gather more data points.
To most shareholders, hedge funds are assumed to be worthless, old financial vehicles of the past. While there are more than 8000 funds trading at present, Our experts hone in on the top tier of this group, about 700 funds. These hedge fund managers control the lion’s share of the hedge fund industry’s total asset base, and by tailing their first-class stock picks, Insider Monkey has discovered various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points annually for a decade in their back tests.
When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies holds the largest position in Nokia Corporation (ADR) (NYSE:NOK). Renaissance Technologies has a $93.2 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $90.9 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish include Rob Citrone’s Discovery Capital Management, Israel Englander’s Millennium Management and Francis Chou’s Chou Associates Management.
On the next page, we are going to take a look at some hedge funds that opted to dump their position in Nokia heading into the second quarter.
Because Nokia Corporation (ADR) (NYSE:NOK) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of money managers that decided to sell off their entire stakes during the first three months of 2016. Intriguingly, Spencer M. Waxman’s Shannon River Fund Management sold off the biggest position of the 700 funds monitored by Insider Monkey, totaling close to $19.7 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $16.6 million worth. These moves are interesting, as total hedge fund interest was cut by six funds heading into Q2.
Let’s now review hedge fund activity in other stocks similar to Nokia Corporation (ADR) (NYSE:NOK). We will take a look at Vale SA (ADR) (NYSE:VALE), Archer Daniels Midland Company (NYSE:ADM), United Continental Holdings Inc (NYSE:UAL), and DISH Network Corp. (NASDAQ:DISH). This group of stocks’ market caps match NOK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VALE | 26 | 214948 | 8 |
| ADM | 24 | 674683 | -3 |
| UAL | 61 | 3375647 | -12 |
| DISH | 51 | 2513021 | -1 |
As you can see these stocks had an average of 40.5 hedge funds with bullish positions and the average amount invested in these stocks was $1695 million. That figure was $391 million in NOK’s case. United Continental Holdings Inc (NYSE:UAL) is the most popular stock in this table. On the other hand Archer Daniels Midland Company (NYSE:ADM) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Nokia Corporation (ADR) (NYSE:NOK) is even less popular than ADM. 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.
Disclosure: None
