Norfolk Southern Corp. (NSC): Hedge Funds Aren’t Crazy About It, Insider Sentiment Unchanged

Norfolk Southern Corp. (NYSE:NSC) investors: listen up.

In the financial world, there are plenty of metrics investors can use to track stocks. A couple of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best hedge fund managers can trounce the broader indices by a significant amount (see just how much).

Just as key, positive insider trading sentiment is a second way to look at the world of equities. As the old adage goes: there are a number of stimuli for an executive to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this method if shareholders know what to do (learn more here).

What’s more, we’re going to study the latest info for Norfolk Southern Corp. (NYSE:NSC).

Hedge fund activity in Norfolk Southern Corp. (NYSE:NSC)

At Q2’s end, a total of 33 of the hedge funds we track were long in this stock, a change of -11% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly.

When using filings from the hedgies we track, First Eagle Investment Management, managed by Matt McLennan, holds the biggest position in Norfolk Southern Corp. (NYSE:NSC). First Eagle Investment Management has a $82.8 million position in the stock, comprising 0.3% of its 13F portfolio. On First Eagle Investment Management’s heels is Bill Miller of Legg Mason Capital Management, with a $81.6 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Daniel Bubis’s Tetrem Capital Management, D. E. Shaw’s D E Shaw and Phill Gross and Robert Atchinson’s Adage Capital Management.

Judging by the fact that Norfolk Southern Corp. (NYSE:NSC) has witnessed dropping sentiment from upper-tier hedge fund managers, logic holds that there was a specific group of fund managers who sold off their positions entirely heading into Q2. It’s worth mentioning that Michael Karsch’s Karsch Capital Management sold off the largest stake of all the hedgies we watch, valued at about $126.4 million in stock, and John Armitage of Egerton Capital Limited was right behind this move, as the fund dumped about $121.6 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 4 funds heading into Q2.

What have insiders been doing with Norfolk Southern Corp. (NYSE:NSC)?

Insider buying is particularly usable when the company in focus has experienced transactions within the past six months. Over the last half-year time period, Norfolk Southern Corp. (NYSE:NSC) has seen zero unique insiders buying, and 7 insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Norfolk Southern Corp. (NYSE:NSC). These stocks are Union Pacific Corporation (NYSE:UNP), Kansas City Southern (NYSE:KSU), Canadian National Railway (USA) (NYSE:CNI), Canadian Pacific Railway Limited (USA) (NYSE:CP), and CSX Corporation (NYSE:CSX). This group of stocks are the members of the railroads industry and their market caps are similar to NSC’s market cap.

Using the returns shown by our strategies, average investors should always keep one eye on hedge fund and insider trading sentiment, and Norfolk Southern Corp. (NYSE:NSC) applies perfectly to this mantra.

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