We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Navistar International Corp (NYSE:NAV).
Is Navistar International Corp (NYSE:NAV) a first-rate investment today? Investors who are in the know are taking an optimistic view. The number of long hedge fund bets advanced by 3 in recent months. Our calculations also showed that nav isn’t among the 30 most popular stocks among hedge funds.
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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the key hedge fund action encompassing Navistar International Corp (NYSE:NAV).
How have hedgies been trading Navistar International Corp (NYSE:NAV)?
Heading into the second quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards NAV over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Icahn Capital LP held the most valuable stake in Navistar International Corp (NYSE:NAV), which was worth $540.4 million at the end of the first quarter. On the second spot was MHR Fund Management which amassed $524.1 million worth of shares. Moreover, GAMCO Investors, Citadel Investment Group, and Renaissance Technologies were also bullish on Navistar International Corp (NYSE:NAV), allocating a large percentage of their portfolios to this stock.
Now, key money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, assembled the largest position in Navistar International Corp (NYSE:NAV). Millennium Management had $9.1 million invested in the company at the end of the quarter. Javier Velazquez’s Albar Capital also made a $5.1 million investment in the stock during the quarter. The other funds with brand new NAV positions are Sara Nainzadeh’s Centenus Global Management, Matthew Hulsizer’s PEAK6 Capital Management, and Murray Stahl’s Horizon Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Navistar International Corp (NYSE:NAV) but similarly valued. These stocks are RLI Corp. (NYSE:RLI), AMC Networks Inc (NASDAQ:AMCX), Generac Holdings Inc. (NYSE:GNRC), and Valley National Bancorp (NASDAQ:VLY). This group of stocks’ market values match NAV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RLI | 13 | 140748 | 1 |
| AMCX | 20 | 259491 | 1 |
| GNRC | 17 | 144727 | -4 |
| VLY | 11 | 26971 | 3 |
| Average | 15.25 | 142984 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $1336 million in NAV’s case. AMC Networks Inc (NASDAQ:AMCX) is the most popular stock in this table. On the other hand Valley National Bancorp (NASDAQ:VLY) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Navistar International Corp (NYSE:NAV) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on NAV, though not to the same extent, as the stock returned -0.1% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
