We at Insider Monkey have gone over 738 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 March 31st. In this article, we look at what those funds think of National Instruments Corporation (NASDAQ:NATI) based on that data.
Is National Instruments Corporation (NASDAQ:NATI) undervalued? The smart money is selling. The number of bullish hedge fund bets fell by 1 in recent months. Our calculations also showed that nati isn't among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's analyze the key hedge fund action regarding National Instruments Corporation (NASDAQ:NATI).
What does the smart money think about National Instruments Corporation (NASDAQ:NATI)?
Heading into the second quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in NATI a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Bares Capital Management was the largest shareholder of National Instruments Corporation (NASDAQ:NATI), with a stake worth $185.3 million reported as of the end of March. Trailing Bares Capital Management was Royce & Associates, which amassed a stake valued at $87.3 million. Arrowstreet Capital, Praesidium Investment Management Company, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Because National Instruments Corporation (NASDAQ:NATI) has experienced declining sentiment from hedge fund managers, it's easy to see that there is a sect of funds that decided to sell off their positions entirely last quarter. Interestingly, Fred Cummings's Elizabeth Park Capital Management cut the biggest investment of all the hedgies tracked by Insider Monkey, worth an estimated $11.3 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also dropped its stock, about $5.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as National Instruments Corporation (NASDAQ:NATI) but similarly valued. We will take a look at Healthcare Trust Of America Inc (NYSE:HTA), Assurant, Inc. (NYSE:AIZ), Nektar Therapeutics (NASDAQ:NKTR), and BOK Financial Corporation (NASDAQ:BOKF). This group of stocks' market caps are closest to NATI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HTA,19,458711,2 AIZ,39,617750,8 NKTR,17,252184,-3 BOKF,16,215649,-3 Average,22.75,386074,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $386 million. That figure was $605 million in NATI's case. Assurant, Inc. (NYSE:AIZ) is the most popular stock in this table. On the other hand BOK Financial Corporation (NASDAQ:BOKF) is the least popular one with only 16 bullish hedge fund positions. National Instruments Corporation (NASDAQ:NATI) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately NATI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NATI were disappointed as the stock returned -11.1% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.