Should You Buy National Storage Affiliates Trust (NSA)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of National Storage Affiliates Trust (NYSE:NSA).

National Storage Affiliates Trust (NYSE:NSA) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that NSA isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 58 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.

Paul Marshall of Marshall Wace

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the new hedge fund action regarding National Storage Affiliates Trust (NYSE:NSA).

Hedge fund activity in National Storage Affiliates Trust (NYSE:NSA)

At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 64% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in NSA a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

The largest stake in National Storage Affiliates Trust (NYSE:NSA) was held by Renaissance Technologies, which reported holding $54.7 million worth of stock at the end of September. It was followed by Winton Capital Management with a $7.9 million position. Other investors bullish on the company included Millennium Management, Two Sigma Advisors, and D E Shaw. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to National Storage Affiliates Trust (NYSE:NSA), around 0.27% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, earmarking 0.24 percent of its 13F equity portfolio to NSA.

As one would reasonably expect, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in National Storage Affiliates Trust (NYSE:NSA). Citadel Investment Group had $1.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Hoon Kim’s Quantinno Capital, and Greg Eisner’s Engineers Gate Manager.

Let’s check out hedge fund activity in other stocks similar to National Storage Affiliates Trust (NYSE:NSA). These stocks are Fitbit Inc (NYSE:FIT), Rogers Corporation (NYSE:ROG), Vonage Holdings Corp. (NYSE:VG), and BankUnited Inc (NYSE:BKU). This group of stocks’ market valuations are closest to NSA’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $77 million in NSA’s case. Fitbit Inc (NYSE:FIT) is the most popular stock in this table. On the other hand BankUnited Inc (NYSE:BKU) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks National Storage Affiliates Trust (NYSE:NSA) is even less popular than BKU. Hedge funds dodged a bullet by taking a bearish stance towards NSA. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but managed to beat the market by 15.9 percentage points. Unfortunately NSA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); NSA investors were disappointed as the stock returned -1.8% during the second quarter (through June 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

Disclosure: None. This article was originally published at Insider Monkey.