Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Northwest Pipe Company (NASDAQ:NWPX) in this article.
Northwest Pipe Company (NASDAQ:NWPX) shareholders have witnessed an increase in enthusiasm from smart money recently. Northwest Pipe Company (NASDAQ:NWPX) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 13. There were 6 hedge funds in our database with NWPX holdings at the end of March. Our calculations also showed that NWPX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Gavin Saitowitz of Prelude Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to take a peek at the new hedge fund action encompassing Northwest Pipe Company (NASDAQ:NWPX).
Do Hedge Funds Think NWPX Is A Good Stock To Buy Now?
At the end of June, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NWPX over the last 24 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in Northwest Pipe Company (NASDAQ:NWPX), which was worth $29.9 million at the end of the second quarter. On the second spot was D E Shaw which amassed $1.9 million worth of shares. Fairfax Financial Holdings, BCK Capital, and Prelude Capital (previously Springbok Capital) were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position BCK Capital allocated the biggest weight to Northwest Pipe Company (NASDAQ:NWPX), around 0.41% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.21 percent of its 13F equity portfolio to NWPX.
Consequently, key money managers have been driving this bullishness. Prelude Capital (previously Springbok Capital), managed by Gavin Saitowitz and Cisco J. del Valle, established the biggest position in Northwest Pipe Company (NASDAQ:NWPX). Prelude Capital (previously Springbok Capital) had $0.7 million invested in the company at the end of the quarter. Kenneth Tropin’s Graham Capital Management also initiated a $0.2 million position during the quarter. The only other fund with a brand new NWPX position is Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Northwest Pipe Company (NASDAQ:NWPX) but similarly valued. These stocks are Matrix Service Co (NASDAQ:MTRX), Iteris Inc (NASDAQ:ITI), Smith Micro Software, Inc. (NASDAQ:SMSI), Select Bancorp, Inc. (NASDAQ:SLCT), Build-A-Bear Workshop, Inc (NYSE:BBW), Flexsteel Industries, Inc. (NASDAQ:FLXS), and 9 Meters Biopharma, Inc. (NASDAQ:NMTR). All of these stocks’ market caps are closest to NWPX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTRX | 10 | 11544 | -1 |
| ITI | 14 | 39126 | -2 |
| SMSI | 11 | 7196 | -3 |
| SLCT | 9 | 29634 | 4 |
| BBW | 13 | 45092 | -1 |
| FLXS | 9 | 66461 | -1 |
| NMTR | 7 | 32996 | -8 |
| Average | 10.4 | 33150 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.4 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $36 million in NWPX’s case. Iteris Inc (NASDAQ:ITI) is the most popular stock in this table. On the other hand 9 Meters Biopharma, Inc. (NASDAQ:NMTR) is the least popular one with only 7 bullish hedge fund positions. Northwest Pipe Company (NASDAQ:NWPX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NWPX is 53.5. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately NWPX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NWPX investors were disappointed as the stock returned -10.6% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Northwest Pipe Co (NASDAQ:NWPX)
Follow Northwest Pipe Co (NASDAQ:NWPX)
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Disclosure: None. This article was originally published at Insider Monkey.
