Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Hedge fund interest in NiSource Inc. (NYSE:NI) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare NI to other stocks including Enel Americas S.A. (NYSE:ENIA), Pearson PLC (NYSE:PSO), and NVR, Inc. (NYSE:NVR) to get a better sense of its popularity.
In the 21st century investor’s toolkit there are a large number of signals investors employ to appraise their stock investments. A pair of the most under-the-radar signals are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outpace their index-focused peers by a healthy margin (see the details here).
We’re going to check out the latest hedge fund action surrounding NiSource Inc. (NYSE:NI).
Hedge fund activity in NiSource Inc. (NYSE:NI)
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, no change from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in NI over the last 13 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in NiSource Inc. (NYSE:NI) was held by Zimmer Partners, which reported holding $338.4 million worth of stock at the end of September. It was followed by Millennium Management with a $126.9 million position. Other investors bullish on the company included Citadel Investment Group, Blackstart Capital, and Balyasny Asset Management.
Due to the fact that NiSource Inc. (NYSE:NI) has experienced bearish sentiment from the smart money, it’s easy to see that there were a few funds who were dropping their entire stakes last quarter. It’s worth mentioning that Jonathan Barrett and Paul Segal’s Luminus Management dropped the largest investment of all the hedgies tracked by Insider Monkey, comprising close to $18.2 million in stock. Richard Driehaus’s fund, Driehaus Capital, also dumped its stock, about $2.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at 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 Enel Americas S.A. (NYSE:ENIA), Pearson PLC (NYSE:PSO), NVR, Inc. (NYSE:NVR), and Bausch Health Companies Inc. (NYSE:BHC). All of these stocks’ market caps are closest to NI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENIA | 11 | 60929 | 0 |
| PSO | 3 | 18126 | -3 |
| NVR | 25 | 847007 | 4 |
| BHC | 30 | 1584429 | 7 |
| Average | 17.25 | 627623 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $628 million. That figure was $626 million in NI’s case. Bausch Health Companies Inc. (NYSE:BHC) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 3 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BHC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
