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Is Nasdaq, Inc. (NDAQ) Going to Burn These Hedge Funds?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Nasdaq, Inc. (NASDAQ:NDAQ).

Nasdaq, Inc. (NASDAQ:NDAQ) has experienced an increase in support from the world's most elite money managers in recent months. Nasdaq, Inc. (NASDAQ:NDAQ) was in 23 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 32. There were 22 hedge funds in our database with NDAQ positions at the end of the first quarter. Our calculations also showed that NDAQ isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At the moment there are plenty of metrics investors employ to appraise their stock investments. Two of the most innovative metrics are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the best fund managers can trounce the broader indices by a very impressive amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Gavin Saitowitz of Prelude Capital
Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let's view the new hedge fund action regarding Nasdaq, Inc. (NASDAQ:NDAQ).

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

At the end of June, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NDAQ over the last 24 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Among these funds, Arrowstreet Capital held the most valuable stake in Nasdaq, Inc. (NASDAQ:NDAQ), which was worth $62.1 million at the end of the second quarter. On the second spot was GLG Partners which amassed $21.3 million worth of shares. Adage Capital Management, Balyasny Asset Management, and Citadel Investment Group 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 Columbus Point allocated the biggest weight to Nasdaq, Inc. (NASDAQ:NDAQ), around 5.57% of its 13F portfolio. Full18 Capital is also relatively very bullish on the stock, dishing out 1.79 percent of its 13F equity portfolio to NDAQ.

As industrywide interest jumped, some big names were leading the bulls' herd. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized position in Nasdaq, Inc. (NASDAQ:NDAQ). Balyasny Asset Management had $17.2 million invested in the company at the end of the quarter. Rob Cope's Columbus Point also initiated a $12.5 million position during the quarter. The following funds were also among the new NDAQ investors: Qing Li's Sciencast Management, Karim Abbadi and Edward McBride's Centiva Capital, and Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital).

Let's now take a look at hedge fund activity in other stocks similar to Nasdaq, Inc. (NASDAQ:NDAQ). We will take a look at Fastenal Company (NASDAQ:FAST), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Zscaler, Inc. (NASDAQ:ZS), McKesson Corporation (NYSE:MCK), Old Dominion Freight Line, Inc. (NASDAQ:ODFL), ViacomCBS Inc. (NASDAQ:VIAC), and Occidental Petroleum Corporation (NYSE:OXY). This group of stocks' market valuations are closest to NDAQ's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FAST,25,650046,1 WLTW,70,5594291,4 ZS,38,1102517,4 MCK,51,2314668,0 ODFL,47,673076,7 VIAC,71,1872050,-18 OXY,57,3620384,5 Average,51.3,2261005,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 51.3 hedge funds with bullish positions and the average amount invested in these stocks was $2261 million. That figure was $192 million in NDAQ's case. ViacomCBS Inc. (NASDAQ:VIAC) is the most popular stock in this table. On the other hand Fastenal Company (NASDAQ:FAST) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Nasdaq, Inc. (NASDAQ:NDAQ) is even less popular than FAST. Our overall hedge fund sentiment score for NDAQ is 27.6. 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. Hedge funds clearly dropped the ball on NDAQ as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on NDAQ as the stock returned 15.1% since Q2 (through October 22nd) and outperformed the market by an even larger margin.

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