Is NSTG Stock A Buy or Sell?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards NanoString Technologies Inc (NASDAQ:NSTG).

Is NSTG stock a buy? NanoString Technologies Inc (NASDAQ:NSTG) investors should be aware of an increase in activity from the world’s largest hedge funds lately. NanoString Technologies Inc (NASDAQ:NSTG) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 20 hedge funds in our database with NSTG positions at the end of the third quarter. Our calculations also showed that NSTG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

Paul Marshall of Marshall Wace

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. With all of this in mind let’s review the fresh hedge fund action regarding NanoString Technologies Inc (NASDAQ:NSTG).

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

Heading into the first quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NSTG over the last 22 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

The largest stake in NanoString Technologies Inc (NASDAQ:NSTG) was held by ARK Investment Management, which reported holding $262 million worth of stock at the end of December. It was followed by Marshall Wace LLP with a $120.1 million position. Other investors bullish on the company included OrbiMed Advisors, Pura Vida Investments, and Millennium Management. In terms of the portfolio weights assigned to each position Pura Vida Investments allocated the biggest weight to NanoString Technologies Inc (NASDAQ:NSTG), around 2.47% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, dishing out 0.95 percent of its 13F equity portfolio to NSTG.

Now, key hedge funds were breaking ground themselves. Perceptive Advisors, managed by Joseph Edelman, initiated the biggest position in NanoString Technologies Inc (NASDAQ:NSTG). Perceptive Advisors had $22.6 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $10.2 million position during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Peter Algert’s Algert Global, and Noam Gottesman’s GLG Partners.

Let’s check out hedge fund activity in other stocks similar to NanoString Technologies Inc (NASDAQ:NSTG). These stocks are Noah Holdings Limited (NYSE:NOAH), J&J Snack Foods Corp. (NASDAQ:JJSF), Lexington Realty Trust (NYSE:LXP), Hancock Whitney Corporation (NASDAQ:HWC), Steven Madden, Ltd. (NASDAQ:SHOO), Red Rock Resorts, Inc. (NASDAQ:RRR), and American States Water Co (NYSE:AWR). This group of stocks’ market valuations resemble NSTG’s market valuation.

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As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $779 million in NSTG’s case. Red Rock Resorts, Inc. (NASDAQ:RRR) is the most popular stock in this table. On the other hand Lexington Realty Trust (NYSE:LXP) is the least popular one with only 12 bullish hedge fund positions. NanoString Technologies Inc (NASDAQ:NSTG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NSTG is 90. 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 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 beat the market again by 0.9 percentage points. Unfortunately NSTG wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on NSTG were disappointed as the stock returned 6.7% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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