We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Nielsen Holdings plc (NYSE:NLSN).
Is Nielsen Holdings plc (NYSE:NLSN) a bargain? Hedge funds are becoming less confident. The number of long hedge fund bets were cut by 5 lately. Our calculations also showed that NLSN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). NLSN was in 29 hedge funds' portfolios at the end of December. There were 34 hedge funds in our database with NLSN holdings at the end of the previous quarter.
To most investors, hedge funds are assumed to be unimportant, old investment vehicles of years past. While there are over 8000 funds in operation today, We choose to focus on the elite of this group, about 850 funds. Most estimates calculate that this group of people watch over the lion's share of the smart money's total capital, and by tailing their matchless investments, Insider Monkey has uncovered numerous investment strategies that have historically outrun the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_26345" align="aligncenter" width="400"] Paul Singer of Elliott Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. With all of this in mind let's go over the new hedge fund action regarding Nielsen Holdings plc (NYSE:NLSN).
What have hedge funds been doing with Nielsen Holdings plc (NYSE:NLSN)?
Heading into the first quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NLSN over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Windacre Partnership held the most valuable stake in Nielsen Holdings plc (NYSE:NLSN), which was worth $342.8 million at the end of the third quarter. On the second spot was Elliott Management which amassed $332.3 million worth of shares. Ariel Investments, Renaissance Technologies, and Deccan Value 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 Windacre Partnership allocated the biggest weight to Nielsen Holdings plc (NYSE:NLSN), around 17.84% of its 13F portfolio. Deccan Value Advisors is also relatively very bullish on the stock, setting aside 4.94 percent of its 13F equity portfolio to NLSN.
Seeing as Nielsen Holdings plc (NYSE:NLSN) has experienced a decline in interest from the aggregate hedge fund industry, it's easy to see that there is a sect of hedgies who sold off their entire stakes heading into Q4. Interestingly, Michel Massoud's Melqart Asset Management dumped the biggest position of the 750 funds followed by Insider Monkey, comprising about $36.2 million in stock. Michael A. Price and Amos Meron's fund, Empyrean Capital Partners, also cut its stock, about $10.1 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds heading into Q4.
Let's also examine hedge fund activity in other stocks similar to Nielsen Holdings plc (NYSE:NLSN). These stocks are TCF Financial Corporation (NASDAQ:TCF), Axalta Coating Systems Ltd (NYSE:AXTA), Five Below Inc (NASDAQ:FIVE), and Cabot Oil & Gas Corporation (NYSE:COG). This group of stocks' market values match NLSN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TCF,24,237950,-7 AXTA,60,1990462,0 FIVE,42,614848,5 COG,34,460767,-6 Average,40,826007,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 40 hedge funds with bullish positions and the average amount invested in these stocks was $826 million. That figure was $1164 million in NLSN's case. Axalta Coating Systems Ltd (NYSE:AXTA) is the most popular stock in this table. On the other hand TCF Financial Corporation (NASDAQ:TCF) is the least popular one with only 24 bullish hedge fund positions. Nielsen Holdings plc (NYSE:NLSN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately NLSN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NLSN investors were disappointed as the stock returned -27.5% during the same time period 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 most of these stocks already outperformed the market in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.