Is Nokia Corporation (NOK) Going To Burn These Hedge Funds ?
How do we determine whether Nokia Corporation (NYSE:NOK) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Nokia Corporation (NYSE:NOK) a splendid investment now? The smart money is taking a pessimistic view. The number of long hedge fund bets were cut by 1 recently. Our calculations also showed that NOK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a lot of tools market participants employ to analyze publicly traded companies. A duo of the best tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass the S&P 500 by a healthy amount (see the details here).
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Dmitry Balyasny of Balyasny Asset Managemnet[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's analyze the latest hedge fund action surrounding Nokia Corporation (NYSE:NOK).
How have hedgies been trading Nokia Corporation (NYSE:NOK)?
At Q3's end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in NOK over the last 17 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Levin Easterly Partners was the largest shareholder of Nokia Corporation (NYSE:NOK), with a stake worth $139.3 million reported as of the end of September. Trailing Levin Easterly Partners was Ariel Investments, which amassed a stake valued at $111 million. Cavalry Asset Management, Arrowstreet Capital, and Balyasny Asset 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 Cavalry Asset Management allocated the biggest weight to Nokia Corporation (NYSE:NOK), around 7.85% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, designating 4.52 percent of its 13F equity portfolio to NOK.
Judging by the fact that Nokia Corporation (NYSE:NOK) has faced a decline in interest from hedge fund managers, logic holds that there is a sect of hedge funds that elected to cut their positions entirely last quarter. Intriguingly, Leon Shaulov's Maplelane Capital said goodbye to the largest position of the "upper crust" of funds tracked by Insider Monkey, valued at close to $5.5 million in stock. Nick Thakore's fund, Diametric Capital, also said goodbye to its stock, about $0.3 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Nokia Corporation (NYSE:NOK). These stocks are Zimmer Biomet Holdings Inc (NYSE:ZBH), Cintas Corporation (NASDAQ:CTAS), HP Inc. (NYSE:HPQ), and PPG Industries, Inc. (NYSE:PPG). This group of stocks' market caps match NOK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZBH,44,1473799,2 CTAS,37,931398,10 HPQ,38,2031394,6 PPG,27,421872,0 Average,36.5,1214616,4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $1215 million. That figure was $417 million in NOK's case. Zimmer Biomet Holdings Inc (NYSE:ZBH) is the most popular stock in this table. On the other hand PPG Industries, Inc. (NYSE:PPG) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Nokia Corporation (NYSE:NOK) is even less popular than PPG. Hedge funds dodged a bullet by taking a bearish stance towards NOK. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NOK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NOK investors were disappointed as the stock returned -30.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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