Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of National Instruments Corporation (NASDAQ:NATI) based on that data.
Is NATI a good stock to buy now? National Instruments Corporation (NASDAQ:NATI) investors should be aware of a decrease in enthusiasm from smart money of late. National Instruments Corporation (NASDAQ:NATI) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 35. There were 35 hedge funds in our database with NATI positions at the end of the second quarter. Our calculations also showed that NATI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ray Dalio of Bridgewater Associates
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s check out the fresh hedge fund action encompassing National Instruments Corporation (NASDAQ:NATI).
Do Hedge Funds Think NATI Is A Good Stock To Buy Now?
At the end of September, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -37% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in NATI a year ago. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of National Instruments Corporation (NASDAQ:NATI), with a stake worth $56.5 million reported as of the end of September. Trailing Royce & Associates was D E Shaw, which amassed a stake valued at $37 million. Bares Capital Management, AQR Capital Management, and Hound Partners 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 Fairpointe Capital allocated the biggest weight to National Instruments Corporation (NASDAQ:NATI), around 2.83% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, setting aside 1.44 percent of its 13F equity portfolio to NATI.
Judging by the fact that National Instruments Corporation (NASDAQ:NATI) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who were dropping their full holdings last quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP cut the largest investment of the 750 funds followed by Insider Monkey, totaling an estimated $33.3 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $12 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 13 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as National Instruments Corporation (NASDAQ:NATI) but similarly valued. We will take a look at LG Display Co Ltd. (NYSE:LPL), Jefferies Financial Group Inc. (NYSE:JEF), Brunswick Corporation (NYSE:BC), Owl Rock Capital Corporation (NYSE:ORCC), East West Bancorp, Inc. (NASDAQ:EWBC), BRP Inc. (NASDAQ:DOOO), and AutoNation, Inc. (NYSE:AN). All of these stocks’ market caps match NATI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPL | 7 | 32638 | 2 |
| JEF | 33 | 599944 | -4 |
| BC | 34 | 734863 | -1 |
| ORCC | 15 | 180660 | 0 |
| EWBC | 20 | 195786 | -3 |
| DOOO | 12 | 119883 | -2 |
| AN | 33 | 414421 | 4 |
| Average | 22 | 325456 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $325 million. That figure was $211 million in NATI’s case. Brunswick Corporation (NYSE:BC) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 7 bullish hedge fund positions. National Instruments Corporation (NASDAQ:NATI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NATI is 38.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on NATI as the stock returned 12.9% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
