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We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of National Grid plc (NYSE:NGG) based on that data.
National Grid plc (NYSE:NGG) shareholders have witnessed an increase in hedge fund interest of late. Our calculations also showed that NGG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_365194" align="aligncenter" width="450"]
David E. Shaw of D.E. Shaw[/caption]
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. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to view the new hedge fund action regarding National Grid plc (NYSE:NGG).
How are hedge funds trading National Grid plc (NYSE:NGG)?
Heading into the fourth quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards NGG over the last 17 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of National Grid plc (NYSE:NGG), with a stake worth $366.6 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $154.1 million. Covalis Capital, D E Shaw, and ExodusPoint Capital 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 Covalis Capital allocated the biggest weight to National Grid plc (NYSE:NGG), around 6.46% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, designating 0.36 percent of its 13F equity portfolio to NGG.
As aggregate interest increased, key hedge funds were leading the bulls' herd. Covalis Capital, managed by Zilvinas Mecelis, established the most outsized position in National Grid plc (NYSE:NGG). Covalis Capital had $5.8 million invested in the company at the end of the quarter. David E. Shaw's D E Shaw also made a $5.5 million investment in the stock during the quarter. The other funds with brand new NGG positions are Michael Gelband's ExodusPoint Capital, Dmitry Balyasny's Balyasny Asset Management, and Paul Marshall and Ian Wace's Marshall Wace.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as National Grid plc (NYSE:NGG) but similarly valued. We will take a look at Dell Technologies Inc. (NYSE:DELL), Pinduoduo Inc. (NASDAQ:PDD), Delta Air Lines, Inc. (NYSE:DAL), and Roper Technologies, Inc. (NYSE:ROP). All of these stocks' market caps are similar to NGG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DELL,45,2444313,5 PDD,30,1435122,1 DAL,65,6996617,-5 ROP,37,1044629,2 Average,44.25,2980170,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 44.25 hedge funds with bullish positions and the average amount invested in these stocks was $2980 million. That figure was $535 million in NGG's case. Delta Air Lines, Inc. (NYSE:DAL) is the most popular stock in this table. On the other hand Pinduoduo Inc. (NASDAQ:PDD) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks National Grid plc (NYSE:NGG) is even less popular than PDD. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on NGG, though not to the same extent, as the stock returned 8.1% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.