The market has been volatile in the last few months as the Federal Reserve continued its rate cuts and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points over the last 12 months. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q2 and the beginning of Q3. In this article, we analyze what the smart money thinks of Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) and find out how it is affected by hedge funds’ moves.
Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) shareholders have witnessed an increase in enthusiasm from smart money of late. OMAB was in 7 hedge funds’ portfolios at the end of June. There were 6 hedge funds in our database with OMAB holdings at the end of the previous quarter. Our calculations also showed that OMAB isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the new hedge fund action encompassing Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB).
Hedge fund activity in Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB)
Heading into the third quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OMAB over the last 16 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
The largest stake in Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) was held by Renaissance Technologies, which reported holding $34.4 million worth of stock at the end of March. It was followed by Arrowstreet Capital with a $11.8 million position. Other investors bullish on the company included Millennium Management, Driehaus Capital, and Bailard Inc.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Stevens Capital Management, managed by Matthew Tewksbury, initiated the largest position in Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB). Stevens Capital Management had $0.3 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) but similarly valued. We will take a look at Pan American Silver Corp. (NASDAQ:PAAS), Murphy USA Inc. (NYSE:MUSA), Energizer Holdings, Inc. (NYSE:ENR), and Colliers International Group Inc (NASDAQ:CIGI). This group of stocks’ market values resemble OMAB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAAS | 17 | 235406 | 0 |
| MUSA | 19 | 206965 | -2 |
| ENR | 17 | 230380 | -7 |
| CIGI | 10 | 714758 | -4 |
| Average | 15.75 | 346877 | -3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $347 million. That figure was $55 million in OMAB’s case. Murphy USA Inc. (NYSE:MUSA) is the most popular stock in this table. On the other hand Colliers International Group Inc (NASDAQ:CIGI) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) is even less popular than CIGI. Hedge funds dodged a bullet by taking a bearish stance towards OMAB. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately OMAB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); OMAB investors were disappointed as the stock returned -2.7% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
