Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards NVIDIA Corporation (NASDAQ:NVDA) at the end of the third quarter and determine whether the smart money was really smart about this stock.
NVIDIA Corporation (NASDAQ:NVDA) shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. NVIDIA Corporation (NASDAQ:NVDA) was in 83 hedge funds’ portfolios at the end of September. The all time high for this statistic is 95. There were 86 hedge funds in our database with NVDA holdings at the end of June. Our calculations also showed that NVDA ranked 29th among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a gander at the new hedge fund action surrounding NVIDIA Corporation (NASDAQ:NVDA).
Rajiv Jain of GQG Partners
Do Hedge Funds Think NVDA Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 83 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the second quarter of 2021. By comparison, 82 hedge funds held shares or bullish call options in NVDA a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GQG Partners was the largest shareholder of NVIDIA Corporation (NASDAQ:NVDA), with a stake worth $3135.4 million reported as of the end of September. Trailing GQG Partners was Citadel Investment Group, which amassed a stake valued at $3002.9 million. Fisher Asset Management, D E Shaw, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Panview Capital allocated the biggest weight to NVIDIA Corporation (NASDAQ:NVDA), around 9.65% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, earmarking 8.58 percent of its 13F equity portfolio to NVDA.
Seeing as NVIDIA Corporation (NASDAQ:NVDA) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of fund managers who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Chris Rokos’s Rokos Capital Management dropped the largest stake of the 750 funds tracked by Insider Monkey, worth an estimated $89.3 million in stock, and John Hurley’s Cavalry Asset Management was right behind this move, as the fund said goodbye to about $17.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as NVIDIA Corporation (NASDAQ:NVDA) but similarly valued. These stocks are JPMorgan Chase & Co. (NYSE:JPM), Visa Inc (NYSE:V), Johnson & Johnson (NYSE:JNJ), Alibaba Group Holding Limited (NYSE:BABA), Walmart Inc. (NYSE:WMT), UnitedHealth Group Inc. (NYSE:UNH), and Bank of America Corporation (NYSE:BAC). This group of stocks’ market values resemble NVDA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JPM | 101 | 5635067 | -7 |
| V | 143 | 26169435 | -19 |
| JNJ | 88 | 6871782 | 0 |
| BABA | 115 | 10201096 | -31 |
| WMT | 71 | 7932562 | 0 |
| UNH | 95 | 11705313 | -10 |
| BAC | 72 | 46487618 | -15 |
| Average | 97.9 | 16428982 | -11.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 97.9 hedge funds with bullish positions and the average amount invested in these stocks was $16429 million. That figure was $10050 million in NVDA’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 71 bullish hedge fund positions. NVIDIA Corporation (NASDAQ:NVDA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NVDA is 36.5. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on NVDA as the stock returned 18.2% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
