The Insider Monkey team has completed processing the quarterly 13F filings for the September 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 nVent Electric plc (NYSE:NVT).
Is NVT a good stock to buy? nVent Electric plc (NYSE:NVT) was in 34 hedge funds’ portfolios at the end of September. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. NVT has seen an increase in enthusiasm from smart money recently. There were 27 hedge funds in our database with NVT positions at the end of the second quarter. Our calculations also showed that NVT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Dmitry Balyasny of Balyasny Asset Management
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 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 gander at the recent hedge fund action encompassing nVent Electric plc (NYSE:NVT).
Do Hedge Funds Think NVT Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in NVT a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Nelson Peltz’s Trian Partners has the largest position in nVent Electric plc (NYSE:NVT), worth close to $103.1 million, corresponding to 1.7% of its total 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $49.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise D. E. Shaw’s D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Diametric Capital allocated the biggest weight to nVent Electric plc (NYSE:NVT), around 3.12% of its 13F portfolio. Trian Partners is also relatively very bullish on the stock, dishing out 1.7 percent of its 13F equity portfolio to NVT.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Sessa Capital, managed by John Petry, established the most valuable position in nVent Electric plc (NYSE:NVT). Sessa Capital had $17.7 million invested in the company at the end of the quarter. Nick Thakore’s Diametric Capital also initiated a $4.2 million position during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Hoon Kim’s Quantinno Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as nVent Electric plc (NYSE:NVT) but similarly valued. We will take a look at MGIC Investment Corporation (NYSE:MTG), Qurate Retail, Inc. (NASDAQ:QRTEA), M.D.C. Holdings, Inc. (NYSE:MDC), Braskem SA (NYSE:BAK), Mimecast Limited (NASDAQ:MIME), Nektar Therapeutics (NASDAQ:NKTR), and Open Lending Corporation (NASDAQ:LPRO). This group of stocks’ market valuations are closest to NVT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTG | 41 | 314368 | 1 |
| QRTEA | 41 | 608143 | -2 |
| MDC | 25 | 135497 | 5 |
| BAK | 8 | 29374 | 1 |
| MIME | 25 | 169600 | -9 |
| NKTR | 21 | 189419 | -5 |
| LPRO | 23 | 394732 | 3 |
| Average | 26.3 | 263019 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $263 million. That figure was $375 million in NVT’s case. MGIC Investment Corporation (NYSE:MTG) is the most popular stock in this table. On the other hand Braskem SA (NYSE:BAK) is the least popular one with only 8 bullish hedge fund positions. nVent Electric plc (NYSE:NVT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NVT is 79.4. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on NVT as the stock returned 30.2% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Nvent Electric Plc (NYSE:NVT)
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Disclosure: None. This article was originally published at Insider Monkey.
