As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Nomad Foods Limited (NYSE:NOMD).
Is NOMD a good stock to buy now? Nomad Foods Limited (NYSE:NOMD) investors should pay attention to a decrease in hedge fund sentiment in recent months. Nomad Foods Limited (NYSE:NOMD) was in 23 hedge funds’ portfolios at the end of September. The all time high for this statistic is 42. There were 26 hedge funds in our database with NOMD positions at the end of the second quarter. Our calculations also showed that NOMD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Dmitry Balyasny of Balyasny Asset Management
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 we’re going to go over the key hedge fund action surrounding Nomad Foods Limited (NYSE:NOMD).
Do Hedge Funds Think NOMD Is A Good Stock To Buy Now?
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NOMD over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Nomad Foods Limited (NYSE:NOMD) was held by Renaissance Technologies, which reported holding $126.3 million worth of stock at the end of September. It was followed by AltraVue Capital with a $44.9 million position. Other investors bullish on the company included D E Shaw, GMT Capital, and Chescapmanager LLC. In terms of the portfolio weights assigned to each position AltraVue Capital allocated the biggest weight to Nomad Foods Limited (NYSE:NOMD), around 6.64% of its 13F portfolio. Claar Advisors is also relatively very bullish on the stock, dishing out 3.6 percent of its 13F equity portfolio to NOMD.
Seeing as Nomad Foods Limited (NYSE:NOMD) has experienced falling interest from hedge fund managers, we can see that there was a specific group of fund managers that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest investment of the 750 funds watched by Insider Monkey, valued at close to $17.3 million in stock, and Steven Boyd’s Armistice Capital was right behind this move, as the fund dropped about $5.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Nomad Foods Limited (NYSE:NOMD). These stocks are Select Medical Holdings Corporation (NYSE:SEM), Amedisys Inc (NASDAQ:AMED), JetBlue Airways Corporation (NASDAQ:JBLU), Herc Holdings Inc. (NYSE:HRI), The Howard Hughes Corporation (NYSE:HHC), Companhia de Saneamento Basico (NYSE:SBS), and Driven Brands Holdings Inc. (NASDAQ:DRVN). All of these stocks’ market caps match NOMD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SEM | 22 | 228726 | -2 |
| AMED | 25 | 271359 | -1 |
| JBLU | 31 | 370640 | 1 |
| HRI | 24 | 1535284 | 4 |
| HHC | 25 | 1469334 | 0 |
| SBS | 6 | 250306 | -5 |
| DRVN | 24 | 183807 | 5 |
| Average | 22.4 | 615637 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $616 million. That figure was $272 million in NOMD’s case. JetBlue Airways Corporation (NASDAQ:JBLU) is the most popular stock in this table. On the other hand Companhia de Saneamento Basico (NYSE:SBS) is the least popular one with only 6 bullish hedge fund positions. Nomad Foods Limited (NYSE:NOMD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NOMD is 52.4. 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 NOMD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NOMD were disappointed as the stock returned -12.2% 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 Nomad Foods Ltd (NYSE:NOMD)
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Disclosure: None. This article was originally published at Insider Monkey.
