One of the great maxims of traders and Wall Street pros is to follow the "smart money."
I'm not much for the thesis that institutional shoppers tend to make smarter investing decisions, but many of you who've read my ruminations on insider buying say you'd also like to know how the Big Money is betting. Your wish is my command.
Next up: NVIDIA
Foolish facts
|
Metric |
NVIDIA |
|---|---|
| CAPS stars (5 max) | ***** |
| Total ratings | 5,213 |
| Percent bulls | 96.1% |
| Percent bears | 3.9% |
| Bullish pitches | 817 out of 861 |
| Highest rated peers | Integrated Device Technology, DSP Group, Power Integrations |
Data current as of Nov. 4.
A two-time pick of our Motley Fool Stock Advisor service, NVIDIA is down 33% year-to-date, falling to prices that most Fools find irresistible.
"I'll bite on a 25% discount from share prices 30 days or so ago. NVIDIA Corp, like many graphics chipmakers has had a rough time since October of 2007 as embedded graphics from Intel and AMD chipped into their markets. The need for a proprietary video card when you have embedded video is becoming less and less except for hardcore gamers and special graphics applications," wrote All-Star investor TSIF in May.
Shares of NVIDIA have barely budged since, even as the company's balance sheet and returns on capital have mostly improved. Not that NVIDIA is without problems. Struggles with its Fermi graphic cards have weighed on margins.
Valuation is a small concern with the stock trading for more than 29 times trailing earnings. But if management can fix Fermi's problems and capitalize on opportunities in the mobile and supercomputing markets, the growth that multiple implies should return.
Institutional ownership history
|
Top Owners |
2007* |
2008* |
2009* |
Latest* |
|---|---|---|---|---|
| Fidelity Investments |
7,333,628 |
9,546,555 |
73,176,532 |
71,701,115 |
| T. Rowe Price Group |
608,706 |
5,355,129 |
2,998,326 |
52,758,601 |
| PRIMECAP Management |
20,935,094 |
36,888,574 |
36,140,912 |
38,984,691 |
| BlackRock |
13,663,407 |
1,612,662 |
47,018,342 |
35,228,736 |
| The Vanguard Group |
16,492,220 |
16,981,482 |
18,983,445 |
20,589,651 |
| TOP 25 TOTAL |
135,452,873 |
250,492,205 |
303,769,765 |
340,645,906 |
Source: Capital IQ, a division of Standard & Poor's.
*Indicates the number of shares owned.
From this table, it’s clear institutions believe in NVIDIA's growth story. Not only are they buying year-over-year, they purchased more than 38 million shares from January to June. They're betting on exactly the sort of turnaround that TSIF describes above.
Most startling is how the biggest of the Big Money operators have piled into the stock. Growth funds have been the biggest spenders. Fidelity Blue Chip Growth (FBGRX) purchased 4.9 million shares during the reporting period ending on September 30, Morningstar reports.
Competitor and peer check-up
|
Company |
Institutional Ownership |
Insider Ownership |
|---|---|---|
|
Advanced Micro Devices |
68.01% |
0.24% |
|
ARM Holdings |
86.39% |
0.55% |
|
Intel |
61.60% |
0.05% |
|
Marvell Technology |
68.89% |
13.00% |
| NVIDIA |
73.97% |
4.06% |
|
QUALCOMM |
76.90% |
1.51% |
Source: Capital IQ. Data current as of Nov. 4.
To me, NVIDIA looks like the most attractive play in this group. Institutions own plenty of shares, yet there remains room for them to buy more. Meanwhile, management and other insiders own enough of the business to benefit directly from a big rally.
And they haven't sold since last December, when the stock was trading for close to $17 a share. That's a bullish sign; it suggests that management and Wall Street are united in their belief that shares of NVIDIA are cheap.
Now it's your turn to weigh in. Would you bet on NVIDIA at current prices? Let us know what you think using the comments box below. You can also recommend other stocks for Tim to evaluate by sending him an email, or replying to him on Twitter.
Interested in more info on NVIDIA? Add it to your watchlist here by clicking here.
