The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded NortonLifeLock Inc. (NASDAQ:NLOK) and determine whether the smart money was really smart about this stock.
Is NortonLifeLock Inc. (NASDAQ:NLOK) worth your attention right now? Hedge funds were cutting their exposure. The number of bullish hedge fund positions retreated by 2 recently. NortonLifeLock Inc. (NASDAQ:NLOK) was in 34 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 46. Our calculations also showed that NLOK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
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. Keeping this in mind let’s review the key hedge fund action regarding NortonLifeLock Inc. (NASDAQ:NLOK).
Do Hedge Funds Think NLOK Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the second quarter of 2021. By comparison, 34 hedge funds held shares or bullish call options in NLOK a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in NortonLifeLock Inc. (NASDAQ:NLOK) was held by Starboard Value LP, which reported holding $422.6 million worth of stock at the end of September. It was followed by Lyrical Asset Management with a $204.6 million position. Other investors bullish on the company included Schonfeld Strategic Advisors, Renaissance Technologies, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position 59 North Capital allocated the biggest weight to NortonLifeLock Inc. (NASDAQ:NLOK), around 15.53% of its 13F portfolio. Totem Point Management is also relatively very bullish on the stock, setting aside 9.93 percent of its 13F equity portfolio to NLOK.
Because NortonLifeLock Inc. (NASDAQ:NLOK) has experienced bearish sentiment from the smart money, we can see that there was a specific group of funds who sold off their full holdings by the end of the third quarter. At the top of the heap, David Cohen and Harold Levy’s Iridian Asset Management dropped the biggest investment of all the hedgies watched by Insider Monkey, valued at close to $182.5 million in stock, and Jinghua Yan’s TwinBeech Capital was right behind this move, as the fund dropped about $4.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to NortonLifeLock Inc. (NASDAQ:NLOK). We will take a look at Plug Power, Inc. (NASDAQ:PLUG), CenterPoint Energy, Inc. (NYSE:CNP), Arch Coal Inc (NYSE:ACI), Apollo Global Management Inc (NYSE:APO), Shaw Communications Inc (NYSE:SJR), Interpublic Group of Companies Inc (NYSE:IPG), and monday.com Ltd. (NASDAQ:MNDY). This group of stocks’ market caps are similar to NLOK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLUG | 20 | 360413 | -14 |
| CNP | 14 | 134303 | -6 |
| ACI | 21 | 4509519 | 1 |
| APO | 47 | 2593894 | 10 |
| SJR | 21 | 892625 | -2 |
| IPG | 31 | 643159 | 0 |
| MNDY | 17 | 495191 | 17 |
| Average | 24.4 | 1375586 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $1376 million. That figure was $1297 million in NLOK’s case. Apollo Global Management Inc (NYSE:APO) is the most popular stock in this table. On the other hand CenterPoint Energy, Inc. (NYSE:CNP) is the least popular one with only 14 bullish hedge fund positions. NortonLifeLock Inc. (NASDAQ:NLOK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NLOK is 55.5. 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 managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on NLOK as the stock returned 3.3% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
