Is NTAP Stock A Buy or Sell?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded NetApp Inc. (NASDAQ:NTAP) based on those filings.

Is NTAP stock a buy? NetApp Inc. (NASDAQ:NTAP) has experienced an increase in hedge fund sentiment recently. NetApp Inc. (NASDAQ:NTAP) was in 34 hedge funds’ portfolios at the end of December. The all time high for this statistic is 33. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NTAP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 124 percentage points since March 2017 (see the details here).

John Rogers of Ariel Investments

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy 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. Now we’re going to check out the fresh hedge fund action surrounding NetApp Inc. (NASDAQ:NTAP).

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

At the end of the fourth quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the third quarter of 2020. By comparison, 27 hedge funds held shares or bullish call options in NTAP a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Citadel Investment Group was the largest shareholder of NetApp Inc. (NASDAQ:NTAP), with a stake worth $158.6 million reported as of the end of December. Trailing Citadel Investment Group was Renaissance Technologies, which amassed a stake valued at $104.5 million. D E Shaw, Ariel Investments, and Holocene Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Breakline Capital allocated the biggest weight to NetApp Inc. (NASDAQ:NTAP), around 2.07% of its 13F portfolio. L2 Asset Management is also relatively very bullish on the stock, setting aside 1.09 percent of its 13F equity portfolio to NTAP.

Now, some big names were leading the bulls’ herd. Holocene Advisors, managed by Brandon Haley, initiated the largest position in NetApp Inc. (NASDAQ:NTAP). Holocene Advisors had $36.3 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $36.2 million investment in the stock during the quarter. The following funds were also among the new NTAP investors: Mark Coe’s Intrinsic Edge Capital, Parvinder Thiara’s Athanor Capital, and Minhua Zhang’s Weld Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as NetApp Inc. (NASDAQ:NTAP) but similarly valued. These stocks are Masimo Corporation (NASDAQ:MASI), Oak Street Health, Inc. (NYSE:OSH), Boston Properties, Inc. (NYSE:BXP), ABIOMED, Inc. (NASDAQ:ABMD), Campbell Soup Company (NYSE:CPB), Arch Capital Group Ltd. (NASDAQ:ACGL), and Brookfield Infrastructure Partners L.P. (NYSE:BIP). This group of stocks’ market caps resemble NTAP’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $574 million. That figure was $583 million in NTAP’s case. Oak Street Health, Inc. (NYSE:OSH) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 14 bullish hedge fund positions. NetApp Inc. (NASDAQ:NTAP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NTAP is 88. 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. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on NTAP as the stock returned 12% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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