Do Hedge Funds Love Northern Trust Corporation (NTRS)?

·6 min read

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Northern Trust Corporation (NASDAQ:NTRS).

Is Northern Trust Corporation (NASDAQ:NTRS) a first-rate investment now? Investors who are in the know were getting more optimistic. The number of long hedge fund bets improved by 4 lately. Northern Trust Corporation (NASDAQ:NTRS) was in 32 hedge funds' portfolios at the end of June. The all time high for this statistic is 37. Our calculations also showed that NTRS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 28 hedge funds in our database with NTRS holdings at the end of March.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Billionaire Mario Gabelli's top 10 Stock Picks
Billionaire Mario Gabelli's top 10 Stock Picks

Mario Gabelli of GAMCO Investors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. Now we're going to take a peek at the latest hedge fund action encompassing Northern Trust Corporation (NASDAQ:NTRS).

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

At Q2's end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from one quarter earlier. On the other hand, there were a total of 35 hedge funds with a bullish position in NTRS a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Ariel Investments was the largest shareholder of Northern Trust Corporation (NASDAQ:NTRS), with a stake worth $214.9 million reported as of the end of June. Trailing Ariel Investments was Junto Capital Management, which amassed a stake valued at $85.9 million. Millennium Management, GAMCO Investors, 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 Junto Capital Management allocated the biggest weight to Northern Trust Corporation (NASDAQ:NTRS), around 2.74% of its 13F portfolio. Global Frontier Investments is also relatively very bullish on the stock, setting aside 2.62 percent of its 13F equity portfolio to NTRS.

As one would reasonably expect, specific money managers were breaking ground themselves. Junto Capital Management, managed by James Parsons, assembled the most outsized position in Northern Trust Corporation (NASDAQ:NTRS). Junto Capital Management had $85.9 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $23.5 million position during the quarter. The other funds with new positions in the stock are Daniel Johnson's Gillson Capital, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Matthew Hulsizer's PEAK6 Capital Management.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Northern Trust Corporation (NASDAQ:NTRS) but similarly valued. These stocks are Expedia Group Inc (NASDAQ:EXPE), International Paper Company (NYSE:IP), Baker Hughes Company (NYSE:BKR), AmerisourceBergen Corporation (NYSE:ABC), Splunk Inc (NASDAQ:SPLK), Canon Inc. (NYSE:CAJ), and Fortive Corporation (NYSE:FTV). This group of stocks' market valuations match NTRS's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXPE,87,5922167,1 IP,31,209500,-5 BKR,40,1012638,-2 ABC,43,1005836,0 SPLK,47,1185992,6 CAJ,8,53729,-1 FTV,31,2235231,4 Average,41,1660728,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $1661 million. That figure was $500 million in NTRS's case. Expedia Group Inc (NASDAQ:EXPE) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 8 bullish hedge fund positions. Northern Trust Corporation (NASDAQ:NTRS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NTRS is 50.1. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on NTRS as the stock returned 5.2% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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

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