Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the third quarter, many investors lost money due to unpredictable events such as the concerns over Valeant’s drug pricing policy that led to an overall drop among pharma stocks. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT) changed recently.
Is Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT) undervalued? The smart money is becoming more confident. The number of bullish hedge fund bets inched up by 4 lately. 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 Oracle Corporation (NASDAQ:ORCL), Visa Inc (NYSE:V), and Royal Dutch Shell plc (ADR) (NYSE:RDS) to gather more data points.
Follow Nippon Telegraph & Telphone Corp (NYSE:NTT)
Follow Nippon Telegraph & Telphone Corp (NYSE:NTT)
In the eyes of most traders, hedge funds are assumed to be unimportant, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation at present, we choose to focus on the masters of this group, about 700 funds. It is estimated that this group of investors control the majority of the hedge fund industry’s total asset base, and by keeping track of their inimitable picks, Insider Monkey has found various investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, we’re going to take a glance at the latest action encompassing Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT).
Hedge fund activity in Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT)
Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT). Renaissance Technologies has a $95.4 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $29.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish encompass Israel Englander’s Millennium Management, Robert B. Gillam’s McKinley Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.
Consequently, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established a position in Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT). Millennium Management had $5.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made an $0.5 million investment in the stock during the quarter. The following funds were also among the new NTT investors: Matthew Tewksbury’s Stevens Capital Management, Joe DiMenna’s ZWEIG DIMENNA PARTNERS, and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks similar to Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT). We will take a look at Oracle Corporation (NASDAQ:ORCL), Visa Inc (NYSE:V), Royal Dutch Shell plc (ADR) (NYSE:RDS), and Citigroup Inc. (NYSE:C). This group of stocks’ market caps match NTT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ORCL | 57 | 7270832 | -1 |
| V | 102 | 8569795 | 4 |
| RDS | 34 | 873203 | -5 |
| C | 121 | 10325538 | -5 |
As you can see these stocks had an average of 79 hedge funds with bullish positions and the average amount invested in these stocks was $6760 million. That figure was $134 million in NTT’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table, while Royal Dutch Shell plc (ADR) (NYSE:RDS) is the least popular one with only 34 bullish hedge fund positions. With only 12 bullish hedge fund positions, Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT) is the least popular among these stocks. This doesn’t necessarily indicate it is not a good stock to buy, since it can also mean that investors thought of it as overvalued, because they weren’t familiar with the bullish thesis. In either case, further research and analyses are advisable.
