In this article you are going to find out whether hedge funds think Northern Trust Corporation (NASDAQ:NTRS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is NTRS stock a buy? Northern Trust Corporation (NASDAQ:NTRS) was in 31 hedge funds’ portfolios at the end of December. The all time high for this statistic is 37. NTRS investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 28 hedge funds in our database with NTRS holdings at the end of September. Our calculations also showed that NTRS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Rogers of Ariel Investments
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. 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. Now we’re going to take a peek at the key hedge fund action encompassing Northern Trust Corporation (NASDAQ:NTRS).
Do Hedge Funds Think NTRS Is A Good Stock To Buy Now?
At the end of December, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NTRS over the last 22 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in Northern Trust Corporation (NASDAQ:NTRS) was held by Ariel Investments, which reported holding $160.1 million worth of stock at the end of December. It was followed by Balyasny Asset Management with a $40.1 million position. Other investors bullish on the company included Millennium Management, GAMCO Investors, and Adage Capital Management. In terms of the portfolio weights assigned to each position Fairpointe Capital allocated the biggest weight to Northern Trust Corporation (NASDAQ:NTRS), around 3.25% of its 13F portfolio. Global Frontier Investments is also relatively very bullish on the stock, dishing out 2.71 percent of its 13F equity portfolio to NTRS.
Consequently, some big names were leading the bulls’ herd. Renaissance Technologies, assembled the biggest position in Northern Trust Corporation (NASDAQ:NTRS). Renaissance Technologies had $4.7 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $4.5 million investment in the stock during the quarter. The following funds were also among the new NTRS investors: Benjamin A. Smith’s Laurion Capital Management, Ray Dalio’s Bridgewater Associates, and Parvinder Thiara’s Athanor Capital.
Let’s check out hedge fund activity in other stocks similar to Northern Trust Corporation (NASDAQ:NTRS). These stocks are Warner Music Group Corp. (NASDAQ:WMG), Ameren Corporation (NYSE:AEE), Rollins, Inc. (NYSE:ROL), Teleflex Incorporated (NYSE:TFX), Kansas City Southern (NYSE:KSU), Fortis Inc. (NYSE:FTS), and Incyte Corporation (NASDAQ:INCY). This group of stocks’ market values are closest to NTRS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WMG | 29 | 1021052 | 9 |
| AEE | 19 | 313397 | -1 |
| ROL | 28 | 644651 | -1 |
| TFX | 30 | 790658 | -10 |
| KSU | 49 | 1020598 | -4 |
| FTS | 9 | 206819 | 1 |
| INCY | 37 | 3891495 | 2 |
| Average | 28.7 | 1126953 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $1127 million. That figure was $388 million in NTRS’s case. Kansas City Southern (NYSE:KSU) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 9 bullish hedge fund positions. Northern Trust Corporation (NASDAQ:NTRS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NTRS is 60.6. 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 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on NTRS as the stock returned 18.9% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
