Is National Instruments Corporation (NASDAQ:NATI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in National Instruments Corporation (NASDAQ:NATI) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that NATI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare NATI to other stocks including Legend Biotech Corporation (NASDAQ:LEGN), SL Green Realty Corp (NYSE:SLG), and Grupo Aeroportuario del Sureste (NYSE:ASR) to get a better sense of its popularity.
At the moment there are plenty of metrics stock market investors employ to assess publicly traded companies. Two of the most under-the-radar metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass their index-focused peers by a superb margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Ray Dalio of Bridgewater Associates
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. Keeping this in mind let's check out the latest hedge fund action encompassing National Instruments Corporation (NASDAQ:NATI).
Do Hedge Funds Think NATI Is A Good Stock To Buy Now?
At Q2's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NATI over the last 24 quarters. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Millennium Management was the largest shareholder of National Instruments Corporation (NASDAQ:NATI), with a stake worth $66.7 million reported as of the end of June. Trailing Millennium Management was Royce & Associates, which amassed a stake valued at $50.5 million. Woodline Partners, Bares Capital Management, and D E Shaw 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 Force Hill Capital Management allocated the biggest weight to National Instruments Corporation (NASDAQ:NATI), around 1.61% of its 13F portfolio. Woodline Partners is also relatively very bullish on the stock, dishing out 0.73 percent of its 13F equity portfolio to NATI.
Because National Instruments Corporation (NASDAQ:NATI) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few money managers who sold off their entire stakes heading into Q3. It's worth mentioning that Renaissance Technologies cut the largest stake of all the hedgies tracked by Insider Monkey, valued at close to $8 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also cut its stock, about $6.3 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to National Instruments Corporation (NASDAQ:NATI). We will take a look at Legend Biotech Corporation (NASDAQ:LEGN), SL Green Realty Corp (NYSE:SLG), Grupo Aeroportuario del Sureste (NYSE:ASR), Pure Storage, Inc. (NYSE:PSTG), BWX Technologies Inc (NYSE:BWXT), NeoGenomics, Inc. (NASDAQ:NEO), and Tripadvisor Inc (NASDAQ:TRIP). This group of stocks' market caps match NATI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LEGN,19,370591,7 SLG,21,144000,0 ASR,5,43748,-3 PSTG,31,791397,1 BWXT,20,160928,4 NEO,13,108232,-2 TRIP,36,1178260,-9 Average,20.7,399594,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $400 million. That figure was $242 million in NATI's case. Tripadvisor Inc (NASDAQ:TRIP) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste (NYSE:ASR) is the least popular one with only 5 bullish hedge fund positions. National Instruments Corporation (NASDAQ:NATI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NATI is 48.8. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately NATI wasn't nearly as popular as these 5 stocks and hedge funds that were betting on NATI were disappointed as the stock returned -4.4% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.