Should You Buy Nelnet, Inc. (NNI)?

Is Nelnet, Inc. (NYSE:NNI) a superb investment right now? The best stock pickers are betting on the stock. The number of bullish hedge fund positions improved by 1 lately.

In the 21st century investor’s toolkit, there are plenty of gauges market participants can use to analyze their holdings. A pair 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 elite fund managers can beat the market by a solid margin (see just how much).

Just as integral, optimistic insider trading activity is a second way to parse down the world of equities. As the old adage goes: there are plenty of reasons for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this method if shareholders know what to do (learn more here).

Consequently, we’re going to take a glance at the latest action encompassing Nelnet, Inc. (NYSE:NNI).

How are hedge funds trading Nelnet, Inc. (NYSE:NNI)?

In preparation for this quarter, a total of 15 of the hedge funds we track held long positions in this stock, a change of 7% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially.

Of the funds we track, Cardinal Capital, managed by Amy Minella, holds the largest position in Nelnet, Inc. (NYSE:NNI). Cardinal Capital has a $32.7 million position in the stock, comprising 2% of its 13F portfolio. On Cardinal Capital’s heels is Israel Englander of Millennium Management, with a $19.8 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Cliff Asness’s AQR Capital Management, David Dreman’s Dreman Value Management and Joseph A. Jolson’s Harvest Capital Strategies.

As one would reasonably expect, key hedge funds have jumped into Nelnet, Inc. (NYSE:NNI) headfirst. Dreman Value Management, managed by David Dreman, established the biggest position in Nelnet, Inc. (NYSE:NNI). Dreman Value Management had 8.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.7 million position during the quarter. The only other fund with a new position in the stock is David Costen Haley’s HBK Investments.

Insider trading activity in Nelnet, Inc. (NYSE:NNI)

Bullish insider trading is most useful when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time period, Nelnet, Inc. (NYSE:NNI) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Nelnet, Inc. (NYSE:NNI). These stocks are World Acceptance Corp. (NASDAQ:WRLD), CapitalSource, Inc. (NYSE:CSE), PHH Corporation (NYSE:PHH), First Cash Financial Services, Inc. (NASDAQ:FCFS), and Cash America International, Inc. (NYSE:CSH). This group of stocks are in the credit services industry and their market caps resemble NNI’s market cap.