Is NDAQ Stock A Buy or Sell?
Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Nasdaq, Inc. (NASDAQ:NDAQ)? The smart money sentiment can provide an answer to this question.
Is NDAQ stock a buy? Nasdaq, Inc. (NASDAQ:NDAQ) shareholders have witnessed a decrease in activity from the world's largest hedge funds in recent months. Nasdaq, Inc. (NASDAQ:NDAQ) was in 27 hedge funds' portfolios at the end of December. The all time high for this statistic is 32. There were 32 hedge funds in our database with NDAQ positions at the end of the third quarter. Our calculations also showed that NDAQ isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
David Siegel of Two Sigma Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. With all of this in mind let's view the new hedge fund action encompassing Nasdaq, Inc. (NASDAQ:NDAQ).
Do Hedge Funds Think NDAQ Is A Good Stock To Buy Now?
At Q4's end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NDAQ over the last 22 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Nasdaq, Inc. (NASDAQ:NDAQ) was held by Two Sigma Advisors, which reported holding $81.8 million worth of stock at the end of December. It was followed by Balyasny Asset Management with a $39.9 million position. Other investors bullish on the company included Renaissance Technologies, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Full18 Capital allocated the biggest weight to Nasdaq, Inc. (NASDAQ:NDAQ), around 2.43% of its 13F portfolio. BlueMar Capital Management is also relatively very bullish on the stock, designating 1.04 percent of its 13F equity portfolio to NDAQ.
Judging by the fact that Nasdaq, Inc. (NASDAQ:NDAQ) has witnessed falling interest from hedge fund managers, it's easy to see that there was a specific group of funds who sold off their positions entirely in the fourth quarter. At the top of the heap, Peter Algert's Algert Global dumped the biggest investment of all the hedgies tracked by Insider Monkey, comprising close to $1.5 million in stock. Mika Toikka's fund, AlphaCrest Capital Management, also dumped its stock, about $1.4 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 5 funds in the fourth quarter.
Let's go over hedge fund activity in other stocks similar to Nasdaq, Inc. (NASDAQ:NDAQ). We will take a look at Farfetch Limited (NYSE:FTCH), PPL Corporation (NYSE:PPL), Church & Dwight Co., Inc. (NYSE:CHD), MarketAxess Holdings Inc. (NASDAQ:MKTX), MongoDB, Inc. (NASDAQ:MDB), Baker Hughes Company (NYSE:BKR), and Kellogg Company (NYSE:K). All of these stocks' market caps match NDAQ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FTCH,47,3034788,7 PPL,21,152416,0 CHD,38,1131247,2 MKTX,34,945720,0 MDB,36,2105361,-6 BKR,35,694644,7 K,37,567314,2 Average,35.4,1233070,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $1233 million. That figure was $340 million in NDAQ's case. Farfetch Limited (NYSE:FTCH) is the most popular stock in this table. On the other hand PPL Corporation (NYSE:PPL) is the least popular one with only 21 bullish hedge fund positions. Nasdaq, Inc. (NASDAQ:NDAQ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NDAQ is 36.9. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on NDAQ as the stock returned 19.9% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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