How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Nutrien Ltd. (NYSE:NTR) and determine whether hedge funds had an edge regarding this stock.
Is Nutrien Ltd. (NYSE:NTR) a sound stock to buy now? The smart money was buying. The number of bullish hedge fund positions advanced by 2 recently. Nutrien Ltd. (NYSE:NTR) was in 30 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that NTR isn’t 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. Keeping this in mind we’re going to check out the recent hedge fund action surrounding Nutrien Ltd. (NYSE:NTR).
Phillip Gross of Adage Capital
Do Hedge Funds Think NTR Is A Good Stock To Buy Now?
At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in NTR a year ago. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the most valuable position in Nutrien Ltd. (NYSE:NTR), worth close to $170.6 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $140.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish contain Phill Gross and Robert Atchinson’s Adage Capital Management, Richard Driehaus’s Driehaus Capital and Joseph Sirdevan’s Galibier Capital Management. In terms of the portfolio weights assigned to each position Moerus Capital Management allocated the biggest weight to Nutrien Ltd. (NYSE:NTR), around 13.08% of its 13F portfolio. Galibier Capital Management is also relatively very bullish on the stock, dishing out 9.19 percent of its 13F equity portfolio to NTR.
As one would reasonably expect, specific money managers were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, established the biggest position in Nutrien Ltd. (NYSE:NTR). Driehaus Capital had $72.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $16.4 million position during the quarter. The other funds with brand new NTR positions are Thomas E. Claugus’s GMT Capital, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, and Ken Grossman and Glen Schneider’s SG Capital Management.
Let’s check out hedge fund activity in other stocks similar to Nutrien Ltd. (NYSE:NTR). These stocks are Hilton Worldwide Holdings Inc (NYSE:HLT), Discover Financial Services (NYSE:DFS), Okta, Inc. (NASDAQ:OKTA), Zscaler, Inc. (NASDAQ:ZS), Centene Corporation (NYSE:CNC), CRH PLC (NYSE:CRH), and General Mills, Inc. (NYSE:GIS). All of these stocks’ market caps resemble NTR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HLT | 44 | 5364120 | -1 |
| DFS | 37 | 516149 | 0 |
| OKTA | 62 | 2262165 | 5 |
| ZS | 38 | 1624343 | 0 |
| CNC | 50 | 2431144 | 1 |
| CRH | 7 | 83127 | -2 |
| GIS | 32 | 731647 | -5 |
| Average | 38.6 | 1858956 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $1859 million. That figure was $853 million in NTR’s case. Okta, Inc. (NASDAQ:OKTA) is the most popular stock in this table. On the other hand CRH PLC (NYSE:CRH) is the least popular one with only 7 bullish hedge fund positions. Nutrien Ltd. (NYSE:NTR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NTR is 53.6. 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 NTR as the stock returned 8.3% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow Nutrien Ltd. (NASDAQ:NTR)
Follow Nutrien Ltd. (NASDAQ:NTR)
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Disclosure: None. This article was originally published at Insider Monkey.
