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Is NLSN Stock A Buy or Sell?

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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Nielsen Holdings plc (NYSE:NLSN).

Is NLSN stock a buy? Money managers were taking a bullish view. The number of long hedge fund bets moved up by 4 lately. Nielsen Holdings plc (NYSE:NLSN) was in 34 hedge funds' portfolios at the end of December. The all time high for this statistic is 35. Our calculations also showed that NLSN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 30 hedge funds in our database with NLSN positions at the end of the third quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Paul Singer ELLIOTT MANAGEMENT
Paul Singer ELLIOTT MANAGEMENT

Paul Singer of Elliott Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy 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. Now we're going to take a glance at the recent hedge fund action regarding Nielsen Holdings plc (NYSE:NLSN).

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

At the end of December, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in NLSN a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Windacre Partnership, managed by Snehal Amin, holds the most valuable position in Nielsen Holdings plc (NYSE:NLSN). Windacre Partnership has a $734.7 million position in the stock, comprising 19.3% of its 13F portfolio. The second most bullish fund manager is Elliott Investment Management, managed by Paul Singer, which holds a $346.4 million position; 3.4% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions encompass John W. Rogers's Ariel Investments, Mitch Kuflik and Rob Sobel's Brahman Capital and Brandon Haley's Holocene Advisors. In terms of the portfolio weights assigned to each position Windacre Partnership allocated the biggest weight to Nielsen Holdings plc (NYSE:NLSN), around 19.31% of its 13F portfolio. Brahman Capital is also relatively very bullish on the stock, designating 9.24 percent of its 13F equity portfolio to NLSN.

As aggregate interest increased, key money managers have been driving this bullishness. Brahman Capital, managed by Mitch Kuflik and Rob Sobel, assembled the most valuable position in Nielsen Holdings plc (NYSE:NLSN). Brahman Capital had $105.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $5.1 million investment in the stock during the quarter. The following funds were also among the new NLSN investors: Dmitry Balyasny's Balyasny Asset Management, Leonard Green's Leonard Green & Partners, and Paul Marshall and Ian Wace's Marshall Wace LLP.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Nielsen Holdings plc (NYSE:NLSN) but similarly valued. These stocks are Kodiak Sciences Inc (NASDAQ:KOD), Voya Financial Inc (NYSE:VOYA), Juniper Networks, Inc. (NYSE:JNPR), Cenovus Energy Inc (NYSE:CVE), Skillz Inc. (NYSE:SKLZ), InVitae Corporation (NYSE:NVTA), and Bausch Health Companies Inc. (NYSE:BHC). All of these stocks' market caps match NLSN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KOD,20,2452174,0 VOYA,44,1189699,-5 JNPR,31,414029,1 CVE,23,238423,5 SKLZ,33,719455,33 NVTA,35,3492478,11 BHC,43,2466124,3 Average,32.7,1567483,6.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $1567 million. That figure was $1627 million in NLSN's case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Kodiak Sciences Inc (NASDAQ:KOD) is the least popular one with only 20 bullish hedge fund positions. Nielsen Holdings plc (NYSE:NLSN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NLSN is 67.3. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on NLSN as the stock returned 21.7% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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