Were hedge funds right about NVIDIA Corporation (NVDA)?

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Before we spend countless hours researching a company, we like to first analyze what insiders, hedge funds, and billionaire investors think about the stock. This is a necessary first step in our investment process, as our research has shown that the consensus returns from elite investors have been exceptional. In the following paragraphs, we find out what billionaire investors and hedge funds think about NVIDIA Corporation (NASDAQ: NVDA).

NVIDIA Corporation (NASDAQ: NVDA) was in 80 hedge fund portfolios at the end of the first quarter of 2021. The all-time high for this statistic is 95. NVDA investors should watch out for declining hedge fund sentiment. time. There were 88 hedge funds in our database with NVDA holdings at the end of December. Our calculations also showed that NVDA is not in the top 30 most popular stocks among hedge funds (click for Q1 rank).

According to most traders, hedge funds are seen as slow and outdated financial vehicles from years past. While there are over 8,000 funds with their doors open today, we are looking at the tycoons at this club, roughly 850 funds. Most estimates calculate that this group of people run most of the total smart money asset base, and by monitoring their best stock picks, Insider Monkey has determined various investment strategies that have historically exceeded the S&P 500 Index. Insider Monkey’s flagship short hedge fund strategy has outperformed the S&P 500 short ETFs by about 20 percentage points per year since its inception in March 2017. In addition, the selection portfolio of Long stocks from our monthly newsletter have returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 index by more than 115 percentage points. You can download a sample issue of this newsletter from our website.

Glen Kacher of Light Street Capital

At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, lithium mining is one of the fastest growing industries right now, so we’re looking at stock locations like this. emerging lithium stocks. We go through lists like the top 10 electric vehicle stocks to pick the next Tesla that will deliver 10x yield. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to equity pitches at hedge fund conferences. You can sign up for our free daily newsletter on our homepage. Now let’s analyze the new hedge fund action around NVIDIA Corporation (NASDAQ: NVDA).

Do hedge funds think NVDA is a good stock to buy now?

At the end of the first quarter, a total of 80 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. Below you can see how hedge fund sentiment towards NVDA has developed over the past 23 quarters. So let’s see which hedge funds were among the top stock holders and which hedge funds were making big moves.

Looking at institutional investors followed by Insider Monkey, Citadel Investment Group, led by Ken Griffin, holds the largest position in NVIDIA Corporation (NASDAQ: NVDA). Citadel Investment Group has a buy position of $ 2.3202 billion in the stock, comprising 0.6% of its 13F portfolio. The second stake is held by GQG Partners, managed by Rajiv Jain, which has a position of $ 1.0572 billion; 3.9% of its 13F portfolio is allocated to securities. Some other peers who hold long positions include DE Shaw of DE Shaw, Fisher Asset Management of Ken Fisher and Citadel Investment Group of Ken Griffin. In terms of the portfolio weights assigned to each position, Panview Capital assigned the largest weight to NVIDIA Corporation (NASDAQ: NVDA), approximately 12.23% of its 13F portfolio. Kadensa Capital is also relatively very bullish on the stock, setting aside 7.31% of its 13F equity portfolio at NVDA.

As NVIDIA Corporation (NASDAQ: NVDA) has faced waning interest from hedge fund managers, we can see that there are a few select fund managers who decided to sell their positions entirely last quarter. It’s worth mentioning that Two Sigma advisers John Overdeck and David Siegel have said goodbye to the biggest position of all the covers watched by Insider Monkey, worth nearly $ 341.2 million in shares, and Coatue Management by Philippe Laffont was right behind this move, as the fund cut around $ 326.8 million. These moves are intriguing to say the least, as total hedge fund interest fell by 8 funds in the last quarter.

Now let’s review the activity of hedge funds in other stocks similar to NVIDIA Corporation (NASDAQ: NVDA). We’ll be looking at The Home Depot, Inc. (NYSE: HD), Paypal Holdings Inc (NASDAQ: PYPL), Intel Corporation (NASDAQ: INTC), ASML Holding NV (NASDAQ: ASML), Comcast Corporation (NASDAQ: CMCSA), Verizon Communications Inc. (NYSE: VZ) and Exxon Mobil Corporation (NYSE: XOM). The market capitalizations of this group of shares correspond to the market capitalization of NVDA.

[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF HD position, 68,4359872, -11 PYPL, 143,14717163, -4 INTC, 83,7616792,11 ASML, 35,3827143, 5 CMCSA, 88.9762151.4 VZ, 69.111383576.2 XOM, 65.2770198.2 Medium, 78.7.7776699,1.3 [/table]

Check the table here if you have formatting issues.

As you can see, these stocks had an average of 78.7 hedge funds with bullish positions and the average amount invested in these stocks was $ 7,777 million. That figure was $ 6,205 million in the case of NVDA. Paypal Holdings Inc (NASDAQ: PYPL) is the most popular stock in this table. On the other hand, ASML Holding NV (NASDAQ: ASML) is the least popular with only 35 bullish hedge fund positions. NVIDIA Corporation (NASDAQ: NVDA) is not the most popular stock in this group, but hedge fund interest is still above average. Our overall hedge fund sentiment score for NVDA is 43.1. Stocks with a 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 the 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020 and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.8% in 2021 through August 6 and have consistently beaten the market by 6.7 percentage points. Hedge funds were also right to bet on NVDA as the stock has returned 52.6% since the end of the first quarter (through 8/6) and has outperformed the market. Hedge funds have been rewarded for their relative optimism.