We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Nice Ltd (ADR) (NASDAQ:NICE) , and what that likely means for the prospects of the company and its stock.
Nice Ltd (ADR) (NASDAQ:NICE) was in 14 hedge funds’ portfolios at the end of September. NICE investors should be aware of an increase in enthusiasm from smart money recently. There were 13 hedge funds in our database with NICE positions at the end of the previous quarter. 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 Hawaiian Holdings, Inc. (NASDAQ:HA), Cree, Inc. (NASDAQ:CREE), and F.N.B. Corp (NYSE:FNB) to gather more data points.
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How have hedgies been trading Nice Ltd (ADR) (NASDAQ:NICE)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 8% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards NICE over the last 5 quarters. So, let’s review 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, Barry Lebovits and Joshua Kuntz of Rivulet Capital holds the most valuable position in Nice Ltd (ADR) (NASDAQ:NICE) which has a $66.7 million position in the stock, comprising 13.6% of its 13F portfolio. The second largest stake is held by HMI Capital, led by Mick Hellman, which holds a $51.9 million position; the fund has 8.6% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish include D E Shaw, one of the biggest hedge funds in the world, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ira Unschuld’s Brant Point Investment Management. We should note that Rivulet Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, key hedge funds have been driving this bullishness. Mike Vranos’ Ellington assembled the largest position in Nice Ltd (ADR) (NASDAQ:NICE). Ellington had $0.8 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.2 million position during the quarter. The only other fund with a brand new NICE position is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Nice Systems Ltd (ADR) (NASDAQ:NICE) but similarly valued. These stocks are Hawaiian Holdings, Inc. (NASDAQ:HA), Cree, Inc. (NASDAQ:CREE), F.N.B. Corp (NYSE:FNB), and Zynga Inc (NASDAQ:ZNGA). All of these stocks’ market caps resemble NICE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HA | 24 | 225910 | 2 |
| CREE | 12 | 45363 | 1 |
| FNB | 14 | 169080 | 2 |
| ZNGA | 28 | 476683 | 8 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $229 million. That figure was $170 million in NICE’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand Cree, Inc. (NASDAQ:CREE) is the least popular one with only 12 bullish hedge fund positions. Nice Ltd (ADR) (NASDAQ:NICE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ZNGA might be a better candidate to consider taking a long position in.
Disclosure: None
