Is NRC Group Holdings Corp. (NYSE:NRCG) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is NRC Group Holdings Corp. (NYSE:NRCG) a safe investment today? Investors who are in the know are getting more optimistic. The number of bullish hedge fund bets improved by 3 lately. Our calculations also showed that NRCG isn’t among the 30 most popular stocks among hedge funds (see the video below).
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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. We’re going to take a glance at the latest hedge fund action regarding NRC Group Holdings Corp. (NYSE:NRCG).
What have hedge funds been doing with NRC Group Holdings Corp. (NYSE:NRCG)?
Heading into the third quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 60% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in NRCG a year ago. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Angelo Gordon & Co held the most valuable stake in NRC Group Holdings Corp. (NYSE:NRCG), which was worth $7 million at the end of the second quarter. On the second spot was Weiss Asset Management which amassed $1 million worth of shares. Moreover, 683 Capital Partners, BlueCrest Capital Mgmt., and Renaissance Technologies were also bullish on NRC Group Holdings Corp. (NYSE:NRCG), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key hedge funds have been driving this bullishness. Weiss Asset Management, managed by Andrew Weiss, initiated the largest position in NRC Group Holdings Corp. (NYSE:NRCG). Weiss Asset Management had $1 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also initiated a $0.8 million position during the quarter. The following funds were also among the new NRCG investors: Renaissance Technologies, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and Robert Henry Lynch’s Aristeia Capital.
Let’s now review hedge fund activity in other stocks similar to NRC Group Holdings Corp. (NYSE:NRCG). These stocks are BioDelivery Sciences International, Inc. (NASDAQ:BDSI), Mistras Group, Inc. (NYSE:MG), MediciNova, Inc. (NASDAQ:MNOV), and EVI Industries, Inc. (NYSE:EVI). All of these stocks’ market caps are closest to NRCG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BDSI | 16 | 118529 | -2 |
| MG | 10 | 28465 | 0 |
| MNOV | 4 | 6107 | 1 |
| EVI | 1 | 2652 | 0 |
| Average | 7.75 | 38938 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $10 million in NRCG’s case. BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is the most popular stock in this table. On the other hand EVI Industries, Inc. (NYSE:EVI) is the least popular one with only 1 bullish hedge fund positions. NRC Group Holdings Corp. (NYSE:NRCG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on NRCG as the stock returned 11.9% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.