Is NS Stock A Buy Here?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding NuStar Energy L.P. (NYSE:NS).

Is NS stock a buy? NuStar Energy L.P. (NYSE:NS) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of March. Our calculations also showed that NS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Kura Oncology, Inc. (NASDAQ:KURA), Vista Outdoor Inc (NYSE:VSTO), and Washington Real Estate Investment Trust (NYSE:WRE) to gather more data points.

In the 21st century investor’s toolkit there are a lot of methods stock traders employ to evaluate stocks. Some of the most innovative methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best money managers can beat the market by a very impressive margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Stuart Zimmer of Zimmer Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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 homepage. Now let’s take a look at the recent hedge fund action encompassing NuStar Energy L.P. (NYSE:NS).

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

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in NS a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Zimmer Partners, managed by Stuart J. Zimmer, holds the most valuable position in NuStar Energy L.P. (NYSE:NS). Zimmer Partners has a $12.6 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $4.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism include Ken Griffin’s Citadel Investment Group, Matthew Hulsizer’s PEAK6 Capital Management and Henry Breck’s Heronetta Management. In terms of the portfolio weights assigned to each position Heronetta Management allocated the biggest weight to NuStar Energy L.P. (NYSE:NS), around 0.25% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, designating 0.17 percent of its 13F equity portfolio to NS.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as NuStar Energy L.P. (NYSE:NS) but similarly valued. These stocks are Kura Oncology, Inc. (NASDAQ:KURA), Vista Outdoor Inc (NYSE:VSTO), Washington Real Estate Investment Trust (NYSE:WRE), Myovant Sciences Ltd. (NYSE:MYOV), JinkoSolar Holding Co., Ltd. (NYSE:JKS), Alamo Group, Inc. (NYSE:ALG), and Hope Bancorp, Inc. (NASDAQ:HOPE). All of these stocks’ market caps are closest to NS’s market cap.

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As you can see these stocks had an average of 16.7 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $18 million in NS’s case. Kura Oncology, Inc. (NASDAQ:KURA) is the most popular stock in this table. On the other hand Washington Real Estate Investment Trust (NYSE:WRE) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks NuStar Energy L.P. (NYSE:NS) is even less popular than WRE. Our overall hedge fund sentiment score for NS is 15.9. 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. Hedge funds clearly dropped the ball on NS as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on NS as the stock returned 19.5% since Q1 (through June 11th) and outperformed the market by an even larger margin.

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