Is NI Stock A Buy or Sell?

In this article we will check out the progression of hedge fund sentiment towards NiSource Inc. (NYSE:NI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is NI stock a buy? NiSource Inc. (NYSE:NI) has experienced a decrease in hedge fund interest lately. NiSource Inc. (NYSE:NI) was in 23 hedge funds’ portfolios at the end of December. The all time high for this statistic is 28. Our calculations also showed that NI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Minhua Zhang of Weld Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. Keeping this in mind let’s go over the latest hedge fund action encompassing NiSource Inc. (NYSE:NI).

Do Hedge Funds Think NI Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NI over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in NiSource Inc. (NYSE:NI). D E Shaw has a $61.5 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $34.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Ken Griffin’s Citadel Investment Group, Michael Gelband’s ExodusPoint Capital and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Wexford Capital allocated the biggest weight to NiSource Inc. (NYSE:NI), around 0.41% of its 13F portfolio. TwinBeech Capital is also relatively very bullish on the stock, setting aside 0.29 percent of its 13F equity portfolio to NI.

Judging by the fact that NiSource Inc. (NYSE:NI) has experienced falling interest from hedge fund managers, it’s safe to say that there exists a select few funds that decided to sell off their full holdings in the fourth quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at an estimated $10 million in stock. Renaissance Technologies, also cut its stock, about $4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the fourth quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NiSource Inc. (NYSE:NI) but similarly valued. We will take a look at Watsco Inc (NYSE:WSO), IAA, Inc. (NYSE:IAA), BridgeBio Pharma, Inc. (NASDAQ:BBIO), The Mosaic Company (NYSE:MOS), Aluminum Corp. of China Limited (NYSE:ACH), The New York Times Company (NYSE:NYT), and Tapestry, Inc. (NYSE:TPR). This group of stocks’ market valuations are closest to NI’s market valuation.

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As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1388 million. That figure was $164 million in NI’s case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 4 bullish hedge fund positions. NiSource Inc. (NYSE:NI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NI is 49.3. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on NI as the stock returned 13.3% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.