We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value 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 investors think of New Residential Investment Corp (NYSE:NRZ).
New Residential Investment Corp (NYSE:NRZ) has experienced a decrease in enthusiasm from smart money of late. NRZ was in 18 hedge funds' portfolios at the end of March. There were 25 hedge funds in our database with NRZ positions at the end of the previous quarter. Our calculations also showed that nrz isn't among the 30 most popular stocks among hedge funds.
In today’s marketplace there are several tools stock market investors use to value stocks. A pair of the most under-the-radar tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outperform the broader indices by a healthy amount (see the details here).
We're going to go over the recent hedge fund action surrounding New Residential Investment Corp (NYSE:NRZ).
Hedge fund activity in New Residential Investment Corp (NYSE:NRZ)
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from the fourth quarter of 2018. On the other hand, there were a total of 21 hedge funds with a bullish position in NRZ a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Balyasny Asset Management held the most valuable stake in New Residential Investment Corp (NYSE:NRZ), which was worth $61.5 million at the end of the first quarter. On the second spot was Capital Growth Management which amassed $36.4 million worth of shares. Moreover, Whitebox Advisors, Renaissance Technologies, and Laurion Capital Management were also bullish on New Residential Investment Corp (NYSE:NRZ), allocating a large percentage of their portfolios to this stock.
Seeing as New Residential Investment Corp (NYSE:NRZ) has experienced declining sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of hedge funds who sold off their full holdings heading into Q3. Interestingly, Michael Blitzer's Kingstown Capital Management said goodbye to the biggest position of the "upper crust" of funds tracked by Insider Monkey, valued at an estimated $21.3 million in stock, and Andrew Feldstein and Stephen Siderow's Blue Mountain Capital was right behind this move, as the fund cut about $7.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 7 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as New Residential Investment Corp (NYSE:NRZ) but similarly valued. We will take a look at EnLink Midstream LLC (NYSE:ENLC), The Carlyle Group LP (NASDAQ:CG), People's United Financial, Inc. (NASDAQ:PBCT), and Companhia Brasileira de Distribuição (NYSE:CBD). This group of stocks' market valuations are similar to NRZ's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ENLC,10,39338,-5 CG,7,122872,-3 PBCT,20,176840,-2 CBD,12,93559,-1 Average,12.25,108152,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $187 million in NRZ's case. People's United Financial, Inc. (NASDAQ:PBCT) is the most popular stock in this table. On the other hand The Carlyle Group LP (NASDAQ:CG) is the least popular one with only 7 bullish hedge fund positions. New Residential Investment Corp (NYSE:NRZ) 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 NRZ wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NRZ were disappointed as the stock returned -5% 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.