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Was The Smart Money Right About NVIDIA (NVDA)?

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·5 min read
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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is NVIDIA Corporation (NASDAQ:NVDA), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

NVIDIA Corporation (NASDAQ:NVDA) has seen an increase in support from the world's most elite money managers lately. NVIDIA Corporation (NASDAQ:NVDA) was in 88 hedge funds' portfolios at the end of December. The all time high for this statistic is 95. There were 82 hedge funds in our database with NVDA positions at the end of the third quarter. Our calculations also showed that NVDA isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Matthew Hulsizer PEAK6 Capital
Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

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. Now we're going to take a look at the new hedge fund action regarding NVIDIA Corporation (NASDAQ:NVDA).

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

At the end of the fourth quarter, a total of 88 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NVDA over the last 22 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Is NVDA A Good Stock To Buy?
Is NVDA A Good Stock To Buy?

According to Insider Monkey's hedge fund database, GQG Partners, managed by Rajiv Jain, holds the largest position in NVIDIA Corporation (NASDAQ:NVDA). GQG Partners has a $1.9498 billion position in the stock, comprising 6.7% of its 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $1.3244 billion position; 1.9% of its 13F portfolio is allocated to the company. Other peers that hold long positions consist of Israel Englander's Millennium Management, Ken Fisher's Fisher Asset Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position GQG Partners allocated the biggest weight to NVIDIA Corporation (NASDAQ:NVDA), around 6.69% of its 13F portfolio. Totem Point Management is also relatively very bullish on the stock, earmarking 5.99 percent of its 13F equity portfolio to NVDA.

Consequently, key money managers were breaking ground themselves. Renaissance Technologies, established the most valuable position in NVIDIA Corporation (NASDAQ:NVDA). Renaissance Technologies had $523.8 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also made a $341.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Hulsizer's PEAK6 Capital Management, David Fiszel's Honeycomb Asset Management, and Chris Rokos's Rokos Capital Management.

Let's go over hedge fund activity in other stocks similar to NVIDIA Corporation (NASDAQ:NVDA). We will take a look at The Home Depot, Inc. (NYSE:HD), Paypal Holdings Inc (NASDAQ:PYPL), Bank of America Corporation (NYSE:BAC), Verizon Communications Inc. (NYSE:VZ), Adobe Inc. (NASDAQ:ADBE), Comcast Corporation (NASDAQ:CMCSA), and Netflix, Inc. (NASDAQ:NFLX). All of these stocks' market caps are similar to NVDA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HD,79,4924208,6 PYPL,147,15961182,-3 BAC,99,35340008,11 VZ,67,10502830,2 ADBE,114,11927730,8 CMCSA,84,8831767,2 NFLX,116,15633343,12 Average,100.9,14731581,5.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 100.9 hedge funds with bullish positions and the average amount invested in these stocks was $14732 million. That figure was $8692 million in NVDA's case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand Verizon Communications Inc. (NYSE:VZ) is the least popular one with only 67 bullish hedge fund positions. NVIDIA Corporation (NASDAQ:NVDA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NVDA is 50.9. 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 NVDA as the stock returned 17.7% 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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