Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of NIKE, Inc. (NYSE:NKE) based on that data.
Is NIKE, Inc. (NYSE:NKE) an outstanding investment right now? Investors who are in the know were becoming less hopeful. The number of bullish hedge fund bets retreated by 11 recently. NIKE, Inc. (NYSE:NKE) was in 67 hedge funds’ portfolios at the end of June. The all time high for this statistic is 82. Our calculations also showed that NKE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 78 hedge funds in our database with NKE positions at the end of the first quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We check out articles like Warren Buffett’s 3 money saving tips that provide inflation and volatility hedges. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a gander at the fresh hedge fund action encompassing NIKE, Inc. (NYSE:NKE).
Do Hedge Funds Think NKE Is A Good Stock To Buy Now?
At second quarter’s end, a total of 67 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in NKE over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fundsmith LLP was the largest shareholder of NIKE, Inc. (NYSE:NKE), with a stake worth $1352.7 million reported as of the end of June. Trailing Fundsmith LLP was Fisher Asset Management, which amassed a stake valued at $1169.4 million. Arrowstreet Capital, GuardCap Asset Management, and Citadel Investment Group 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 Broad Peak Investment Holdings allocated the biggest weight to NIKE, Inc. (NYSE:NKE), around 10.32% of its 13F portfolio. GuardCap Asset Management is also relatively very bullish on the stock, designating 7.74 percent of its 13F equity portfolio to NKE.
Since NIKE, Inc. (NYSE:NKE) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies that decided to sell off their positions entirely heading into Q3. Intriguingly, Daniel Sundheim’s D1 Capital Partners dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising close to $223.4 million in stock, and Aaron Cowen’s Suvretta Capital Management was right behind this move, as the fund sold off about $143 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 11 funds heading into Q3.
Let’s go over hedge fund activity in other stocks similar to NIKE, Inc. (NYSE:NKE). These stocks are Netflix, Inc. (NASDAQ:NFLX), The Coca-Cola Company (NYSE:KO), Verizon Communications Inc. (NYSE:VZ), Intel Corporation (NASDAQ:INTC), salesforce.com, inc. (NYSE:CRM), Cisco Systems, Inc. (NASDAQ:CSCO), and Eli Lilly and Company (NYSE:LLY). All of these stocks’ market caps are similar to NKE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NFLX | 113 | 13216589 | 3 |
| KO | 62 | 24965786 | 1 |
| VZ | 63 | 10958091 | -6 |
| INTC | 78 | 6764047 | -5 |
| CRM | 108 | 11767293 | 17 |
| CSCO | 60 | 4219112 | 1 |
| LLY | 64 | 2994849 | 9 |
| Average | 78.3 | 10697967 | 2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 78.3 hedge funds with bullish positions and the average amount invested in these stocks was $10698 million. That figure was $6425 million in NKE’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand Cisco Systems, Inc. (NASDAQ:CSCO) is the least popular one with only 60 bullish hedge fund positions. NIKE, Inc. (NYSE:NKE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NKE is 25.1. 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 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. A small number of hedge funds were also right about betting on NKE as the stock returned 8.5% since the end of the second quarter (through 10/29) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
