The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Newtek Business Services, Inc (NASDAQ:NEWT).
Newtek Business Services, Inc (NASDAQ:NEWT) was in 6 hedge funds’ portfolios at the end of September. NEWT has seen an increase in hedge fund interest lately. There were 5 hedge funds in our database with NEWT holdings at the end of the previous quarter. Our calculations also showed that NEWT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to review the new hedge fund action regarding Newtek Business Services, Inc (NASDAQ:NEWT).
How have hedgies been trading Newtek Business Services, Inc (NASDAQ:NEWT)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in NEWT over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mark Coe’s Intrinsic Edge Capital has the most valuable position in Newtek Business Services, Inc (NASDAQ:NEWT), worth close to $5.2 million, corresponding to 0.6% of its total 13F portfolio. On Intrinsic Edge Capital’s heels is McKinley Capital Management, managed by Robert B. Gillam, which holds a $3.1 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism consist of Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Louis Navellier’s Navellier & Associates. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Newtek Business Services, Inc (NASDAQ:NEWT), around 0.58% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, earmarking 0.23 percent of its 13F equity portfolio to NEWT.
As aggregate interest increased, some big names were breaking ground themselves. Navellier & Associates, managed by Louis Navellier, initiated the largest position in Newtek Business Services, Inc (NASDAQ:NEWT). Navellier & Associates had $1.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0 million position during the quarter.
Let’s check out hedge fund activity in other stocks similar to Newtek Business Services, Inc (NASDAQ:NEWT). We will take a look at Oportun Financial Corporation (NASDAQ:OPRT), Gulfport Energy Corporation (NASDAQ:GPOR), Intrepid Potash, Inc. (NYSE:IPI), and Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB). This group of stocks’ market caps resemble NEWT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OPRT | 12 | 18874 | 12 |
| GPOR | 14 | 72978 | -3 |
| IPI | 14 | 20221 | -2 |
| RRGB | 15 | 46746 | 3 |
| Average | 13.75 | 39705 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $13 million in NEWT’s case. Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) is the most popular stock in this table. On the other hand Oportun Financial Corporation (NASDAQ:OPRT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Newtek Business Services, Inc (NASDAQ:NEWT) is even less popular than OPRT. Hedge funds dodged a bullet by taking a bearish stance towards NEWT. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NEWT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NEWT investors were disappointed as the stock returned 3.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
