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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Nautilus, Inc. (NYSE:NLS) based on that data and determine whether they were really smart about the stock.
Nautilus, Inc. (NYSE:NLS) was in 10 hedge funds' portfolios at the end of the first quarter of 2020. NLS shareholders have witnessed an increase in hedge fund sentiment lately. There were 9 hedge funds in our database with NLS holdings at the end of the previous quarter. Our calculations also showed that NLS isn't 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
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Paul Tudor Jones of Tudor Investment Corp[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's go over the latest hedge fund action regarding Nautilus, Inc. (NYSE:NLS).
Hedge fund activity in Nautilus, Inc. (NYSE:NLS)
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the fourth quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in NLS a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Nautilus, Inc. (NYSE:NLS) was held by Skylands Capital, which reported holding $2.3 million worth of stock at the end of September. It was followed by Millennium Management with a $2.1 million position. Other investors bullish on the company included D E Shaw, Two Sigma Advisors, and G2 Investment Partners Management. In terms of the portfolio weights assigned to each position Manatuck Hill Partners allocated the biggest weight to Nautilus, Inc. (NYSE:NLS), around 0.67% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, designating 0.5 percent of its 13F equity portfolio to NLS.
As one would reasonably expect, key money managers were breaking ground themselves. G2 Investment Partners Management, managed by Josh Goldberg, created the biggest position in Nautilus, Inc. (NYSE:NLS). G2 Investment Partners Management had $1.1 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also initiated a $0 million position during the quarter. The only other fund with a new position in the stock is Peter Algert and Kevin Coldiron's Algert Coldiron Investors.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Nautilus, Inc. (NYSE:NLS) but similarly valued. These stocks are Resonant Inc. (NASDAQ:RESN), MVC Capital, Inc. (NYSE:MVC), BiondVax Pharmaceuticals Ltd. (NASDAQ:BVXV), and USD Partners LP (NYSE:USDP). This group of stocks' market valuations resemble NLS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RESN,4,717,2 MVC,9,21421,0 BVXV,1,163,0 USDP,2,485,0 Average,4,5697,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $10 million in NLS's case. MVC Capital, Inc. (NYSE:MVC) is the most popular stock in this table. On the other hand BiondVax Pharmaceuticals Ltd. (NASDAQ:BVXV) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Nautilus, Inc. (NYSE:NLS) is more popular among hedge funds. 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 returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on NLS as the stock returned 255.2% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.