U.S. Markets close in 1 hr 27 mins

2019 Review: Most Favored Hedge Fund Stocks vs. Nomad Foods Limited (NOMD)

Reymerlyn Martin

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Nomad Foods Limited (NYSE:NOMD) and see how the stock performed in comparison to hedge funds' consensus picks.

Is Nomad Foods Limited (NYSE:NOMD) a marvelous investment right now? Hedge funds are taking an optimistic view. The number of long hedge fund positions rose by 5 recently. Our calculations also showed that NOMD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

To the average investor there are a lot of tools investors put to use to analyze publicly traded companies. A couple of the most under-the-radar tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can trounce the broader indices by a significant amount (see the details here).

[caption id="attachment_256989" align="aligncenter" width="600"] Dmitry Balyasny of Balyasny Asset Managemnet[/caption]

Dmitry Balyasny of Balyasny Asset Managemnet

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. With all of this in mind we're going to go over the recent hedge fund action surrounding Nomad Foods Limited (NYSE:NOMD).

How have hedgies been trading Nomad Foods Limited (NYSE:NOMD)?

At Q3's end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 34 hedge funds with a bullish position in NOMD a year ago. 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, Samlyn Capital held the most valuable stake in Nomad Foods Limited (NYSE:NOMD), which was worth $79 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $54.4 million worth of shares. Woodson Capital Management, D E Shaw, and BlueDrive Global Investors 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 HPS Investment Partners allocated the biggest weight to Nomad Foods Limited (NYSE:NOMD), around 47.85% of its 13F portfolio. Sheffield Asset Management is also relatively very bullish on the stock, designating 10.03 percent of its 13F equity portfolio to NOMD.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls' herd. HPS Investment Partners, managed by Scott Kapnick, initiated the most outsized position in Nomad Foods Limited (NYSE:NOMD). HPS Investment Partners had $19.1 million invested in the company at the end of the quarter. Curtis Schenker and Craig Effron's Scoggin also made a $8.2 million investment in the stock during the quarter. The following funds were also among the new NOMD investors: Dmitry Balyasny's Balyasny Asset Management, Bart Baum's Ionic Capital Management, and Thomas Bailard's Bailard Inc.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Nomad Foods Limited (NYSE:NOMD) but similarly valued. We will take a look at FTI Consulting, Inc. (NYSE:FCN), IBERIABANK Corporation (NASDAQ:IBKC), Outfront Media Inc (NYSE:OUT), and Aerojet Rocketdyne Holdings Inc (NYSE:AJRD). This group of stocks' market valuations are closest to NOMD's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FCN,18,138946,1 IBKC,19,163668,-6 OUT,29,478492,7 AJRD,21,465161,3 Average,21.75,311567,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $312 million. That figure was $487 million in NOMD's case. Outfront Media Inc (NYSE:OUT) is the most popular stock in this table. On the other hand FTI Consulting, Inc. (NYSE:FCN) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Nomad Foods Limited (NYSE:NOMD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on NOMD, though not to the same extent, as the stock returned 33.8% during the same period and outperformed the market as well. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

Related Content