Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about NCR Corporation (NYSE:NCR).
NCR Corporation (NYSE:NCR) investors should pay attention to a decrease in hedge fund interest lately. NCR Corporation (NYSE:NCR) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 42. Our calculations also showed that NCR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a look at the key hedge fund action surrounding NCR Corporation (NYSE:NCR).
Glenn Welling of Engaged Capital
Do Hedge Funds Think NCR Is A Good Stock To Buy Now?
At the end of September, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -26% from the second quarter of 2021. On the other hand, there were a total of 32 hedge funds with a bullish position in NCR a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Point72 Asset Management, managed by Steve Cohen, holds the most valuable position in NCR Corporation (NYSE:NCR). Point72 Asset Management has a $111.2 million position in the stock, comprising 0.5% of its 13F portfolio. The second largest stake is held by Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $106.8 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism contain Glenn W. Welling’s Engaged Capital, Carl Goldsmith and Scott Klein’s Beach Point Capital Management and Seth Rosen’s Nitorum Capital. In terms of the portfolio weights assigned to each position Cowbird Capital allocated the biggest weight to NCR Corporation (NYSE:NCR), around 12.56% of its 13F portfolio. Beach Point Capital Management is also relatively very bullish on the stock, designating 7.67 percent of its 13F equity portfolio to NCR.
Seeing as NCR Corporation (NYSE:NCR) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few hedge funds that decided to sell off their positions entirely last quarter. Intriguingly, Guy Shahar’s DSAM Partners sold off the largest stake of the “upper crust” of funds followed by Insider Monkey, totaling close to $29.9 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund dumped about $23 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 10 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NCR Corporation (NYSE:NCR) but similarly valued. These stocks are American National Group Inc. (NASDAQ:ANAT), Tuya Inc. (NYSE:TUYA), MGIC Investment Corporation (NYSE:MTG), Certara, Inc. (NASDAQ:CERT), Rayonier Inc. (NYSE:RYN), Tilray, Inc. (NASDAQ:TLRY), and Semtech Corporation (NASDAQ:SMTC). This group of stocks’ market values are closest to NCR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ANAT | 16 | 93762 | -4 |
| TUYA | 11 | 71032 | 3 |
| MTG | 27 | 298208 | 0 |
| CERT | 15 | 170457 | 8 |
| RYN | 13 | 329246 | 0 |
| TLRY | 16 | 84873 | -1 |
| SMTC | 29 | 290157 | 1 |
| Average | 18.1 | 191105 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $191 million. That figure was $518 million in NCR’s case. Semtech Corporation (NASDAQ:SMTC) is the most popular stock in this table. On the other hand Tuya Inc. (NYSE:TUYA) is the least popular one with only 11 bullish hedge fund positions. NCR Corporation (NYSE:NCR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NCR is 62.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately NCR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NCR were disappointed as the stock returned 3.8% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Ncr Voyix Corp (NYSE:VYX)
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Disclosure: None. This article was originally published at Insider Monkey.
