We Dig Into the Smart Money Sentiment Towards Nice Systems Ltd (ADR) (NICE)

How do we determine whether Nice Systems Ltd (ADR) (NASDAQ:NICE) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

Is Nice Systems Ltd (ADR) (NASDAQ:NICE) a splendid stock to buy right now? Hedge funds are taking a pessimistic view. The number of long hedge fund bets shrunk by 1 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Retail Properties of America Inc (NYSE:RPAI), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), and Owens-Illinois Inc (NYSE:OI) to gather more data points.

According to most traders, hedge funds are assumed to be slow, old investment vehicles of the past. While there are more than an 8,000 funds with their doors open today, our experts look at the aristocrats of this group, approximately 700 funds. These money managers manage the lion’s share of the smart money’s total asset base, and by monitoring their finest stock picks, Insider Monkey has discovered a few investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, we’re going to check out the fresh action encompassing Nice Systems Ltd (ADR) (NASDAQ:NICE).

What does the smart money think about Nice Systems Ltd (ADR) (NASDAQ:NICE)?

At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 5% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or had already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mick Hellman’s HMI Capital has the most valuable position in Nice Systems Ltd (ADR) (NASDAQ:NICE), worth close to $47.2 million, corresponding to 14.8% of its total 13F portfolio. Sitting in the #2 spot is Rivulet Capital, managed by Barry Lebovits and Joshua Kuntz, which holds a $32.6 million position; 15.2% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism comprise James Parsons’ Junto Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and D E Shaw.

Due to the fact that Nice Systems Ltd (ADR) (NASDAQ:NICE) has faced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedge funds that elected to cut their full holdings heading into Q4. Intriguingly, Soros Fund Management sold off the biggest position of all the hedgies watched by Insider Monkey, totaling close to $65.3 million in stock, and Chao Ku’s Nine Chapters Capital Management was right behind this move, as the fund cut about $0.7 million worth of shares. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 fund heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Nice Systems Ltd (ADR) (NASDAQ:NICE) but similarly valued. We will take a look at Retail Properties of America Inc (NYSE:RPAI), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Owens-Illinois Inc (NYSE:OI), and Companhia Brasileira de Distrib. (ADR) (NYSE:CBD). This group of stocks’ market valuations match Nice Systems Ltd’s market valuation.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $474 million. That figure was $170 million in Nice Systems Ltd’s case. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is the most popular stock in this table. On the other hand Companhia Brasileira de Distrib. (ADR) (NYSE:CBD) is the least popular one with only 8 bullish hedge fund positions. Nice Systems Ltd (ADR) (NASDAQ:NICE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are pouring money into. In this regard ACADIA Pharmaceuticals Inc. and Owens-Illinois Inc might be better candidates to consider long positions in.