Hedge Funds Are Crazy About Nutanix, Inc. (NTNX)
The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Nutanix, Inc. (NASDAQ:NTNX).
Nutanix, Inc. (NASDAQ:NTNX) has seen an increase in activity from the world's largest hedge funds in recent months. NTNX was in 39 hedge funds' portfolios at the end of September. There were 34 hedge funds in our database with NTNX positions at the end of the previous quarter. Our calculations also showed that NTNX isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to check out the recent hedge fund action surrounding Nutanix, Inc. (NASDAQ:NTNX).
How are hedge funds trading Nutanix, Inc. (NASDAQ:NTNX)?
Heading into the fourth quarter of 2018, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NTNX over the last 13 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in Nutanix, Inc. (NASDAQ:NTNX). D E Shaw has a $135.7 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, led by Jim Simons, holding a $100.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Dennis Puri and Oliver Keller's Hunt Lane Capital, Israel Englander's Millennium Management and Ken Griffin's Citadel Investment Group.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Hunt Lane Capital, managed by Dennis Puri and Oliver Keller, established the biggest position in Nutanix, Inc. (NASDAQ:NTNX). Hunt Lane Capital had $72.6 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $14 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen's Point72 Asset Management, Andrew Sandler's Sandler Capital Management, and Robert B. Gillam's McKinley Capital Management.
Let's now review hedge fund activity in other stocks similar to Nutanix, Inc. (NASDAQ:NTNX). We will take a look at Ares Capital Corporation (NASDAQ:ARCC), Hubbell Incorporated (NYSE:HUBB), Jefferies Financial Group Inc. (NYSE:JEF), and Affiliated Managers Group, Inc. (NYSE:AMG). This group of stocks' market caps resemble NTNX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARCC,25,285375,2 HUBB,27,780075,5 JEF,39,724586,5 AMG,32,732597,6 Average,30.75,630658,4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.75 hedge funds with bullish positions and the average amount invested in these stocks was $631 million. That figure was $653 million in NTNX's case. Jefferies Financial Group Inc. (NYSE:JEF) is the most popular stock in this table. On the other hand Ares Capital Corporation (NASDAQ:ARCC) is the least popular one with only 25 bullish hedge fund positions. Nutanix, Inc. (NASDAQ:NTNX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard JEF might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
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