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Hedge Funds Are Souring On Nokia Corporation (NOK)

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  • NOKIA.HE

At Insider Monkey, we pore over the filings of nearly 867 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30th. In this article, we will use that wealth of knowledge to determine whether or not Nokia Corporation (NYSE:NOK) makes for a good investment right now.

Nokia Corporation (NYSE:NOK) investors should be aware of a decrease in hedge fund sentiment lately. Nokia Corporation (NYSE:NOK) was in 22 hedge funds' portfolios at the end of September. The all time high for this statistic is 27. Our calculations also showed that NOK isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let's review the latest hedge fund action surrounding Nokia Corporation (NYSE:NOK).

John Rogers’ Top 10 Stock Picks
John Rogers’ Top 10 Stock Picks

John Rogers of Ariel Investments

Do Hedge Funds Think NOK Is A Good Stock To Buy Now?

At Q3's end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in NOK a year ago. So, let's see 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, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the largest position in Nokia Corporation (NYSE:NOK). Arrowstreet Capital has a $123.2 million position in the stock, comprising 0.2% of its 13F portfolio. On Arrowstreet Capital's heels is Millennium Management, led by Israel Englander, holding a $95.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish contain John Hurley's Cavalry Asset Management, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners and John W. Rogers's Ariel Investments. In terms of the portfolio weights assigned to each position Cavalry Asset Management allocated the biggest weight to Nokia Corporation (NYSE:NOK), around 3.66% of its 13F portfolio. Mondrian Capital is also relatively very bullish on the stock, earmarking 1.71 percent of its 13F equity portfolio to NOK.

Due to the fact that Nokia Corporation (NYSE:NOK) has faced falling interest from the entirety of the hedge funds we track, logic holds that there were a few funds that decided to sell off their entire stakes last quarter. Intriguingly, Paul Marshall and Ian Wace's Marshall Wace LLP dumped the largest position of the 750 funds followed by Insider Monkey, totaling close to $8.6 million in stock. Simon Sadler's fund, Segantii Capital, also sold off its stock, about $3.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds last quarter.

Let's also examine hedge fund activity in other stocks similar to Nokia Corporation (NYSE:NOK). These stocks are Phillips 66 (NYSE:PSX), Liberty Broadband Corp (NASDAQ:LBRDA), Zimmer Biomet Holdings Inc (NYSE:ZBH), Chunghwa Telecom Co., Ltd (NYSE:CHT), Southwest Airlines Co. (NYSE:LUV), XPeng Inc. (NYSE:XPEV), and Equity Residential (NYSE:EQR). This group of stocks' market values are closest to NOK's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PSX,34,409385,8 LBRDA,24,885745,-4 ZBH,47,1664979,-1 CHT,6,156827,-1 LUV,39,729508,-10 XPEV,25,657189,6 EQR,32,558805,1 Average,29.6,723205,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $723 million. That figure was $388 million in NOK's case. Zimmer Biomet Holdings Inc (NYSE:ZBH) is the most popular stock in this table. On the other hand Chunghwa Telecom Co., Ltd (NYSE:CHT) 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 45. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on NOK as the stock returned 14.1% since the end of the third quarter (through 12/31) and outperformed the market by an even larger margin.

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