We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Nokia Corporation (NYSE:NOK).
Nokia Corporation (NYSE:NOK) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. Nokia Corporation (NYSE:NOK) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 27. There were 19 hedge funds in our database with NOK positions at the end of the fourth quarter. Our calculations also showed that NOK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Paul Marshall of Marshall Wace
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Do Hedge Funds Think NOK Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NOK over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Nokia Corporation (NYSE:NOK). Arrowstreet Capital has a $119.8 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $60.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism consist of Simon Sadler’s Segantii Capital, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners and Renaissance Technologies. In terms of the portfolio weights assigned to each position Segantii Capital allocated the biggest weight to Nokia Corporation (NYSE:NOK), around 1.67% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, setting aside 0.84 percent of its 13F equity portfolio to NOK.
As aggregate interest increased, some big names have been driving this bullishness. Segantii Capital, managed by Simon Sadler, established the most valuable position in Nokia Corporation (NYSE:NOK). Segantii Capital had $38.9 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also made a $33.7 million investment in the stock during the quarter. The other funds with brand new NOK positions are Matthew Hulsizer’s PEAK6 Capital Management, Tor Minesuk’s Mondrian Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Nokia Corporation (NYSE:NOK) but similarly valued. These stocks are Edison International (NYSE:EIX), McCormick & Company, Incorporated (NYSE:MKC), PPL Corporation (NYSE:PPL), Equifax Inc. (NYSE:EFX), Cerner Corporation (NASDAQ:CERN), POSCO (NYSE:PKX), and Splunk Inc (NASDAQ:SPLK). This group of stocks’ market valuations are closest to NOK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EIX | 35 | 1564442 | 5 |
| MKC | 35 | 1969760 | -1 |
| PPL | 25 | 152408 | 4 |
| EFX | 37 | 2475296 | 1 |
| CERN | 40 | 1135093 | 6 |
| PKX | 12 | 157036 | 2 |
| SPLK | 41 | 934345 | -6 |
| Average | 32.1 | 1198340 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1198 million. That figure was $353 million in NOK’s case. Splunk Inc (NASDAQ:SPLK) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 12 bullish hedge fund positions. Nokia Corporation (NYSE:NOK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NOK is 45.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on NOK as the stock returned 43.4% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
