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Were Hedge Funds Right About Flocking Into Navient Corp (NAVI) ?

Asma UL Husna

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of December 31st. In this article, we look at what those funds think of Navient Corp (NASDAQ:NAVI) based on that data.

Navient Corp (NASDAQ:NAVI) was in 29 hedge funds' portfolios at the end of the fourth quarter of 2018. NAVI investors should be aware of an increase in hedge fund interest of late. There were 27 hedge funds in our database with NAVI positions at the end of the previous quarter. Our calculations also showed that NAVI isn't among the 30 most popular stocks among hedge funds.

In the 21st century investor’s toolkit there are many formulas stock traders put to use to assess stocks. A couple of the less utilized formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outperform the market by a healthy amount (see the details here).

[caption id="attachment_324853" align="aligncenter" width="450"] Joshua Friedman of Canyon Capital[/caption]

Josh Friedman Canyon Capital

We're going to take a gander at the new hedge fund action surrounding Navient Corp (NASDAQ:NAVI).

Hedge fund activity in Navient Corp (NASDAQ:NAVI)

At Q4's end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 27 hedge funds with a bullish position in NAVI a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

NAVI_apr2019

The largest stake in Navient Corp (NASDAQ:NAVI) was held by Canyon Capital Advisors, which reported holding $226 million worth of stock at the end of September. It was followed by Carlson Capital with a $46.3 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and Arrowstreet Capital.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Fir Tree, managed by Jeffrey Tannenbaum, created the most outsized position in Navient Corp (NASDAQ:NAVI). Fir Tree had $3.6 million invested in the company at the end of the quarter. Anand Parekh's Alyeska Investment Group also made a $2.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin's Citadel Investment Group, Emanuel J. Friedman's EJF Capital, and Bruce Kovner's Caxton Associates LP.

Let's check out hedge fund activity in other stocks similar to Navient Corp (NASDAQ:NAVI). These stocks are John Bean Technologies Corporation (NYSE:JBT), Acadia Healthcare Company Inc (NASDAQ:ACHC), Monro, Inc. (NASDAQ:MNRO), and Genesis Energy, L.P. (NYSE:GEL). This group of stocks' market valuations resemble NAVI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JBT,9,59938,-4 ACHC,18,309481,-1 MNRO,18,179953,8 GEL,5,7438,3 Average,12.5,139203,1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $399 million in NAVI's case. Acadia Healthcare Company Inc (NASDAQ:ACHC) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Navient Corp (NASDAQ:NAVI) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on NAVI as the stock returned 38.7% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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