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Should You Avoid National Vision Holdings, Inc. (EYE)?

Debasis Saha

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of National Vision Holdings, Inc. (NASDAQ:EYE) based on that data.

National Vision Holdings, Inc. (NASDAQ:EYE) was in 14 hedge funds' portfolios at the end of the first quarter of 2020. EYE investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. There were 15 hedge funds in our database with EYE positions at the end of the previous quarter. Our calculations also showed that EYE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are several gauges shareholders use to analyze their stock investments. Some of the most innovative gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outpace their index-focused peers by a significant amount (see the details here).

[caption id="attachment_673876" align="aligncenter" width="400"] John Overdeck of Two Sigma Advisors[/caption]

John Overdeck of Two Sigma

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 easiest car rental companies to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a peek at the recent hedge fund action regarding National Vision Holdings, Inc. (NASDAQ:EYE).

How are hedge funds trading National Vision Holdings, Inc. (NASDAQ:EYE)?

Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EYE over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is EYE A Good Stock To Buy?

More specifically, Adage Capital Management was the largest shareholder of National Vision Holdings, Inc. (NASDAQ:EYE), with a stake worth $151.4 million reported as of the end of September. Trailing Adage Capital Management was Select Equity Group, which amassed a stake valued at $17 million. Citadel Investment Group, Columbus Circle Investors, and Two Sigma Advisors 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 Adage Capital Management allocated the biggest weight to National Vision Holdings, Inc. (NASDAQ:EYE), around 0.45% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.42 percent of its 13F equity portfolio to EYE.

Judging by the fact that National Vision Holdings, Inc. (NASDAQ:EYE) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there exists a select few funds who sold off their entire stakes by the end of the first quarter. At the top of the heap, Richard Walters II's Stony Point Capital said goodbye to the largest investment of the 750 funds watched by Insider Monkey, comprising about $4.6 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dropped about $3.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the first quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as National Vision Holdings, Inc. (NASDAQ:EYE) but similarly valued. These stocks are LexinFintech Holdings Ltd. (NASDAQ:LX), Pluralsight, Inc. (NASDAQ:PS), Prospect Capital Corporation (NASDAQ:PSEC), and Epizyme Inc (NASDAQ:EPZM). This group of stocks' market valuations are closest to EYE's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LX,17,39778,4 PS,18,77707,0 PSEC,8,16564,-7 EPZM,22,351530,4 Average,16.25,121395,0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $199 million in EYE's case. Epizyme Inc (NASDAQ:EPZM) is the most popular stock in this table. On the other hand Prospect Capital Corporation (NASDAQ:PSEC) is the least popular one with only 8 bullish hedge fund positions. National Vision Holdings, Inc. (NASDAQ:EYE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on EYE as the stock returned 56.4% during the second quarter 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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