The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded NVIDIA Corporation (NASDAQ:NVDA) based on those filings.
NVIDIA Corporation (NASDAQ:NVDA) investors should pay attention to an increase in hedge fund sentiment of late. NVDA was in 95 hedge funds' portfolios at the end of March. There were 79 hedge funds in our database with NVDA positions at the end of the previous quarter. Our calculations also showed that NVDA is now 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_731853" align="aligncenter" width="399"] Scott Bessent of Key Square Capital Management[/caption]
At Insider Monkey 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 believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Now we're going to view the latest hedge fund action regarding NVIDIA Corporation (NASDAQ:NVDA).
How have hedgies been trading NVIDIA Corporation (NASDAQ:NVDA)?
At the end of the first quarter, a total of 95 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards NVDA over the last 18 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.
More specifically, Citadel Investment Group was the largest shareholder of NVIDIA Corporation (NASDAQ:NVDA), with a stake worth $1106.8 million reported as of the end of September. Trailing Citadel Investment Group was GQG Partners, which amassed a stake valued at $995 million. D E Shaw, Fisher Asset Management, and Citadel Investment Group 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 Albar Capital allocated the biggest weight to NVIDIA Corporation (NASDAQ:NVDA), around 12.79% of its 13F portfolio. AlphaOne Capital Partners is also relatively very bullish on the stock, setting aside 9.6 percent of its 13F equity portfolio to NVDA.
As industrywide interest jumped, key money managers were breaking ground themselves. Whale Rock Capital Management, managed by Alex Sacerdote, assembled the most outsized position in NVIDIA Corporation (NASDAQ:NVDA). Whale Rock Capital Management had $116.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $64.7 million position during the quarter. The following funds were also among the new NVDA investors: Josh Resnick's Jericho Capital Asset Management, Scott Bessent's Key Square Capital Management, and John Hurley's Cavalry Asset Management.
Let's now take a look at hedge fund activity in other stocks similar to NVIDIA Corporation (NASDAQ:NVDA). These stocks are Exxon Mobil Corporation (NYSE:XOM), Comcast Corporation (NASDAQ:CMCSA), China Mobile Limited (NYSE:CHL), and Adobe Inc. (NASDAQ:ADBE). This group of stocks' market valuations resemble NVDA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XOM,65,1295305,2 CMCSA,83,5538665,-4 CHL,11,449753,-1 ADBE,115,8180671,9 Average,68.5,3866099,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 68.5 hedge funds with bullish positions and the average amount invested in these stocks was $3866 million. That figure was $4128 million in NVDA's case. Adobe Inc. (NASDAQ:ADBE) is the most popular stock in this table. On the other hand China Mobile Limited (NYSE:CHL) is the least popular one with only 11 bullish hedge fund positions. NVIDIA Corporation (NASDAQ:NVDA) is not the most popular stock in this group but hedge fund interest is still above 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 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on NVDA as the stock returned 37% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.