Were Hedge Funds Right About Piling Into Norfolk Southern Corp. (NSC)?

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Norfolk Southern Corp. (NYSE:NSC) based on that data.

Norfolk Southern Corp. (NYSE:NSC) has experienced an increase in hedge fund sentiment recently. Norfolk Southern Corp. (NYSE:NSC) was in 58 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 54. This means the bullish number of hedge fund positions in this stock currently sits at its new all time high. Our calculations also showed that NSC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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Ken Fisher of Fisher Asset Management

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Do Hedge Funds Think NSC Is A Good Stock To Buy Now?

At Q2’s end, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NSC over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Palestra Capital Management held the most valuable stake in Norfolk Southern Corp. (NYSE:NSC), which was worth $218 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $166.6 million worth of shares. Millennium Management, D E Shaw, and Adage Capital Management 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 Palestra Capital Management allocated the biggest weight to Norfolk Southern Corp. (NYSE:NSC), around 4.69% of its 13F portfolio. Alight Capital is also relatively very bullish on the stock, dishing out 3.82 percent of its 13F equity portfolio to NSC.

As aggregate interest increased, key hedge funds have been driving this bullishness. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, established the most outsized position in Norfolk Southern Corp. (NYSE:NSC). Senator Investment Group had $86.3 million invested in the company at the end of the quarter. Renaissance Technologies also made a $85.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Joseph Samuels’s Islet Management, and Gregg Moskowitz’s Interval Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Norfolk Southern Corp. (NYSE:NSC) but similarly valued. These stocks are Bank of Montreal (NYSE:BMO), Edwards Lifesciences Corporation (NYSE:EW), Atlassian Corporation Plc (NASDAQ:TEAM), Autodesk, Inc. (NASDAQ:ADSK), The Southern Company (NYSE:SO), Air Products & Chemicals, Inc. (NYSE:APD), and Analog Devices, Inc. (NASDAQ:ADI). All of these stocks’ market caps resemble NSC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 46.6 hedge funds with bullish positions and the average amount invested in these stocks was $2344 million. That figure was $1489 million in NSC’s case. Atlassian Corporation Plc (NASDAQ:TEAM) is the most popular stock in this table. On the other hand Bank of Montreal (NYSE:BMO) is the least popular one with only 12 bullish hedge fund positions. Norfolk Southern Corp. (NYSE:NSC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NSC is 84.2. 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. Hedge funds were also right about betting on NSC as the stock returned 10.9% since the end of Q2 (through 10/29) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.