After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 28. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards National Grid plc (NYSE:NGG).
Hedge fund interest in National Grid plc (NYSE:NGG) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Dow Inc. (NYSE:DOW), Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA), and Activision Blizzard, Inc. (NASDAQ:ATVI) to gather more data points.
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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. We’re going to take a peek at the fresh hedge fund action encompassing National Grid plc (NYSE:NGG).
What does smart money think about National Grid plc (NYSE:NGG)?
Heading into the third quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NGG over the last 16 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in National Grid plc (NYSE:NGG) was held by Renaissance Technologies, which reported holding $317.6 million worth of stock at the end of March. It was followed by Arrowstreet Capital with a $209.6 million position. Other investors bullish on the company included Citadel Investment Group, Citadel Investment Group, and Ellington.
Since National Grid plc (NYSE:NGG) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of funds that slashed their positions entirely by the end of the second quarter. Interestingly, Zilvinas Mecelis’s Covalis Capital dumped the largest position of the 750 funds followed by Insider Monkey, comprising about $23.6 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dropped about $0.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as National Grid plc (NYSE:NGG) but similarly valued. We will take a look at Dow Inc. (NYSE:DOW), Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA), Activision Blizzard, Inc. (NASDAQ:ATVI), and Fiserv, Inc. (NASDAQ:FISV). This group of stocks’ market caps resemble NGG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOW | 33 | 325782 | 25 |
| BBVA | 7 | 181357 | 3 |
| ATVI | 46 | 2957305 | -4 |
| FISV | 48 | 2256630 | 1 |
| Average | 33.5 | 1430269 | 6.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $1430 million. That figure was $532 million in NGG’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) is the least popular one with only 7 bullish hedge fund positions. National Grid plc (NYSE:NGG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks (see the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on NGG, though not to the same extent, as the stock returned 1.8% during the third quarter and outperformed the market.
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.
