Is National Instruments Corp (NATI) A Good Stock To Buy?

Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors. In this article we will take a look at hedge fund sentiment surrounding National Instruments Corp (NASDAQ:NATI) and try to answer whether it may be a good stock to buy right now.

Our calculations show that National Instruments Corp (NASDAQ:NATI) experienced an increase in hedge fund interest lately. NATI was in 19 hedge funds’ portfolios at the end of the third quarter of 2015. There were 17 hedge funds in our database with NATI holdings at the end of the previous quarter. Usually this is a good sign but we also need to see how this compares to its market cap peers. So, at the end of this article we will also compare NATI to other stocks including CVR Energy, Inc. (NYSE:CVI), Paramount Group Inc (NYSE:PGRE), and Morningstar, Inc. (NASDAQ:MORN) to get a better sense of its popularity.

What does the smart money think about National Instruments Corp (NASDAQ:NATI)?

Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in National Instruments Corp (NASDAQ:NATI), worth close to $137.3 million, comprising 0.7% of its total 13F portfolio. Sitting at the No. 2 spot is Bares Capital Management, managed by Brian Bares, which holds a $39.5 million position; 3.9% of its 13F portfolio is allocated to the company. Remaining peers that are bullish comprise David Blood and Al Gore’s Generation Investment Management, Jim Simons’s Renaissance Technologies and Jacob Gottlieb’s Visium Asset Management.

As one would reasonably expect, specific money managers have jumped into National Instruments Corp (NASDAQ:NATI) headfirst. Generation Investment Management, founded by former presidential candidate Al Gore, initiated the most outsized position in National Instruments Corp (NASDAQ:NATI). Generation Investment Management had $21 million invested in the company at the end of the quarter. Paul Hondros’s AlphaOne Capital Partners also made a $2.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Ray Dalio’s Bridgewater Associates, Cliff Asness’s AQR Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as National Instruments Corp (NASDAQ:NATI) but similarly valued. We will take a look at CVR Energy, Inc. (NYSE:CVI), Paramount Group Inc (NYSE:PGRE), Morningstar, Inc. (NASDAQ:MORN), and Vermilion Energy Inc (NYSE:VET). All of these stocks’ market caps are closest to NATI’s market cap.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $908 million. That figure was $245 million in NATI’s case. CVR Energy, Inc. (NYSE:CVI) is the most popular stock in this table. On the other hand Vermilion Energy Inc (NYSE:VET) is the least popular one with only 6 bullish hedge fund positions. National Instruments Corp (NASDAQ:NATI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CVI might be a better candidate to consider a long position.