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 Ackman’s recent Valeant losses). However, it is still 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 Nokia Corp (ADR) (NYSE:NOK).
Is Nokia Corp (ADR) (NYSE:NOK) undervalued? The best stock pickers are getting more optimistic. The number of long hedge fund bets that are revealed through the 13F filings swelled by 1 recently. NOK was in 16 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with NOK holdings at the end of the previous quarter. At the end of this article we will also compare NOK to other stocks including Exelon Corporation (NYSE:EXC), Praxair, Inc. (NYSE:PX), and Barclays PLC (ADR) (NYSE:BCS) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How have hedgies been trading Nokia Corp (ADR) (NYSE:NOK)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a rise of 7% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in NOK at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, John A. Levin’s Levin Capital Strategies has the biggest position in Nokia Corp (ADR) (NYSE:NOK), worth close to $232.8 million, amounting to 3.4% of its total 13F portfolio. Sitting at the No. 2 spot is Ariel Investments, led by John W. Rogers, which holds a $120.3 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Jim Simons’ Renaissance Technologies, and Anand Parekh’s Alyeska Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, specific money managers were breaking ground themselves. Citadel Investment Group, led by Ken Griffin, assembled the most outsized position in Nokia Corp (ADR) (NYSE:NOK). Citadel Investment Group had $22.1 million invested in the company at the end of the quarter. Neil Chriss’ Hutchin Hill Capital also initiated a $3.2 million position during the quarter. The following funds were also among the new NOK investors: Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management, and Philip Hempleman’s Ardsley Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Nokia Corp (ADR) (NYSE:NOK) but similarly valued. These stocks are Exelon Corporation (NYSE:EXC), Praxair, Inc. (NYSE:PX), Barclays PLC (ADR) (NYSE:BCS), and TransCanada Corporation (USA) (NYSE:TRP). This group of stocks’ market values match NOK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXC | 25 | 781952 | -2 |
| PX | 34 | 536035 | -1 |
| BCS | 14 | 235346 | -1 |
| TRP | 14 | 331601 | -4 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $471 million. That figure was $555 million in NOK’s case. Praxair, Inc. (NYSE:PX) is the most popular stock in this table. On the other hand Barclays PLC (ADR) (NYSE:BCS) is the least popular one with only 14 bullish hedge fund positions. Nokia Corp (ADR) (NYSE:NOK) 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 PX might be a better candidate to consider taking a long position in.
Disclosure: None
