At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Northern Trust Corporation (NASDAQ:NTRS) makes for a good investment right now.
Is Northern Trust Corporation (NASDAQ:NTRS) a sound investment right now? Prominent investors are taking a bearish view. The number of long hedge fund positions were trimmed by 8 lately. Our calculations also showed that NTRS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). NTRS was in 21 hedge funds' portfolios at the end of September. There were 29 hedge funds in our database with NTRS positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are numerous formulas stock market investors use to grade publicly traded companies. A duo of the most underrated formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can trounce their index-focused peers by a significant margin (see the details here).
[caption id="attachment_340081" align="aligncenter" width="450"] Phill Gross of Adage Capital Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's go over the new hedge fund action regarding Northern Trust Corporation (NASDAQ:NTRS).
What does smart money think about Northern Trust Corporation (NASDAQ:NTRS)?
At Q3's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -28% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NTRS over the last 17 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Ariel Investments was the largest shareholder of Northern Trust Corporation (NASDAQ:NTRS), with a stake worth $170.2 million reported as of the end of September. Trailing Ariel Investments was GAMCO Investors, which amassed a stake valued at $40.2 million. Adage Capital Management, Levin Capital Strategies, and Millennium Management 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 MD Sass allocated the biggest weight to Northern Trust Corporation (NASDAQ:NTRS), around 2.93% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, earmarking 2.27 percent of its 13F equity portfolio to NTRS.
Due to the fact that Northern Trust Corporation (NASDAQ:NTRS) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers who sold off their full holdings in the third quarter. At the top of the heap, Ravi Chopra's Azora Capital dropped the largest stake of all the hedgies tracked by Insider Monkey, totaling close to $24 million in stock. Ken Griffin's fund, Citadel Investment Group, also cut its stock, about $13.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 8 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Northern Trust Corporation (NASDAQ:NTRS). These stocks are Boston Properties, Inc. (NYSE:BXP), Vulcan Materials Company (NYSE:VMC), Hewlett Packard Enterprise Company (NYSE:HPE), and Imperial Oil Limited (NYSE:IMO). This group of stocks' market caps resemble NTRS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BXP,24,447838,1 VMC,53,1965254,1 HPE,27,822361,-1 IMO,11,42957,-1 Average,28.75,819603,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $820 million. That figure was $316 million in NTRS's case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand Imperial Oil Limited (NYSE:IMO) is the least popular one with only 11 bullish hedge fund positions. Northern Trust Corporation (NASDAQ:NTRS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on NTRS as the stock returned 14.9% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.