Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in NCS Multistage Holdings, Inc. (NASDAQ:NCSM)? The smart money sentiment can provide an answer to this question.
NCS Multistage Holdings, Inc. (NASDAQ:NCSM) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Great Elm Capital Group, Inc. (NASDAQ:GEC), Cyren Ltd (NASDAQ:CYRN), and Navios Maritime Acquisition Corp (NYSE:NNA) to gather more data points. Our calculations also showed that NCSM 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.
In today’s marketplace there are a lot of signals shareholders employ to grade stocks. Some of the best signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can trounce the S&P 500 by a superb amount (see the details here).
Dmitry Balyasny of Balyasny Asset Managemnet
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. With all of this in mind we’re going to analyze the latest hedge fund action regarding NCS Multistage Holdings, Inc. (NASDAQ:NCSM).
What does smart money think about NCS Multistage Holdings, Inc. (NASDAQ:NCSM)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in NCSM a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Dmitry Balyasny’s Balyasny Asset Management has the number one position in NCS Multistage Holdings, Inc. (NASDAQ:NCSM), worth close to $0.2 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Paul Tudor Jones’s Tudor Investment Corp, David E. Shaw’s D E Shaw and . In terms of the portfolio weights assigned to each position Balyasny Asset Management allocated the biggest weight to NCS Multistage Holdings, Inc. (NASDAQ:NCSM), around 0.0017% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.0014 percent of its 13F equity portfolio to NCSM.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was D E Shaw).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as NCS Multistage Holdings, Inc. (NASDAQ:NCSM) but similarly valued. We will take a look at Great Elm Capital Group, Inc. (NASDAQ:GEC), Cyren Ltd (NASDAQ:CYRN), Navios Maritime Acquisition Corp (NYSE:NNA), and Alaska Communications Systems Group Inc (NASDAQ:ALSK). This group of stocks’ market valuations match NCSM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GEC | 8 | 30835 | 1 |
| CYRN | 2 | 1888 | 0 |
| NNA | 2 | 2384 | 0 |
| ALSK | 5 | 5624 | 0 |
| Average | 4.25 | 10183 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $1 million in NCSM’s case. Great Elm Capital Group, Inc. (NASDAQ:GEC) is the most popular stock in this table. On the other hand Cyren Ltd (NASDAQ:CYRN) is the least popular one with only 2 bullish hedge fund positions. NCS Multistage Holdings, Inc. (NASDAQ:NCSM) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on NCSM, though not to the same extent, as the stock returned 7.5% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.