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Hedge Funds Are Coming Back To Nokia Corporation (NOK)

Asma UL Husna
·6 mins read

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 second 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 5 years and analyze what the smart money thinks of Nokia Corporation (NYSE:NOK) based on that data and determine whether they were really smart about the stock.

Is Nokia Corporation (NYSE:NOK) a healthy stock for your portfolio? Money managers were turning bullish. The number of long hedge fund bets rose by 3 recently. Nokia Corporation (NYSE:NOK) was in 26 hedge funds' portfolios at the end of June. The all time high for this statistics is 27. Our calculations also showed that NOK isn't among the 30 most popular stocks among hedge funds (click for Q2 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 methods stock market investors employ to evaluate stocks. Some of the best methods are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best investment managers can beat the market by a significant amount (see the details here).

John Rogers Ariel Investments
John Rogers Ariel Investments

John Rogers of Ariel Investments

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we're going to take a look at the recent hedge fund action surrounding Nokia Corporation (NYSE:NOK).

How have hedgies been trading Nokia Corporation (NYSE:NOK)?

At the end of June, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the first quarter of 2020. By comparison, 24 hedge funds held shares or bullish call options in NOK a year ago. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Among these funds, Ariel Investments held the most valuable stake in Nokia Corporation (NYSE:NOK), which was worth $69.2 million at the end of the third quarter. On the second spot was Sirios Capital Management which amassed $27.7 million worth of shares. Millennium Management, Capital Growth Management, and Portolan Capital 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 Boardman Bay Capital Management allocated the biggest weight to Nokia Corporation (NYSE:NOK), around 2.98% of its 13F portfolio. Sirios Capital Management is also relatively very bullish on the stock, designating 2.26 percent of its 13F equity portfolio to NOK.

As aggregate interest increased, key money managers have jumped into Nokia Corporation (NYSE:NOK) headfirst. Capital Growth Management, managed by Ken Heebner, initiated the largest position in Nokia Corporation (NYSE:NOK). Capital Growth Management had $14.5 million invested in the company at the end of the quarter. Thyra Zerhusen's Fairpointe Capital also made a $8.7 million investment in the stock during the quarter. The other funds with brand new NOK positions are Larry Chen and Terry Zhang's Tairen Capital, Paul Hondros's AlphaOne Capital Partners, and Kevin McCarthy's Breakline Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Nokia Corporation (NYSE:NOK) but similarly valued. These stocks are Zimmer Biomet Holdings Inc (NYSE:ZBH), Rockwell Automation Inc. (NYSE:ROK), Waste Connections, Inc. (NYSE:WCN), Telefonica S.A. (NYSE:TEF), Otis Worldwide Corporation (NYSE:OTIS), Fastenal Company (NASDAQ:FAST), and Barclays PLC (NYSE:BCS). This group of stocks' market valuations are closest to NOK's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZBH,62,752893,11 ROK,50,546946,13 WCN,39,720610,6 TEF,6,9842,-1 OTIS,56,2110419,52 FAST,34,633636,0 BCS,8,35407,-5 Average,36.4,687108,10.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.4 hedge funds with bullish positions and the average amount invested in these stocks was $687 million. That figure was $219 million in NOK's case. Zimmer Biomet Holdings Inc (NYSE:ZBH) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 6 bullish hedge fund positions. Nokia Corporation (NYSE:NOK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NOK is 54.7. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 21.3% in 2020 through September 25th and surpassed the market by 17.7 percentage points. Unfortunately NOK wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); NOK investors were disappointed as the stock returned -14.1% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

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