We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like NV5 Global, Inc. (NASDAQ:NVEE).
Is NV5 Global, Inc. (NASDAQ:NVEE) an exceptional investment right now? Money managers are becoming more confident. The number of long hedge fund positions increased by 2 recently. Our calculations also showed that NVEE 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.
Matthew Hulsizer of PEAK6 Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the new hedge fund action surrounding NV5 Global, Inc. (NASDAQ:NVEE).
What have hedge funds been doing with NV5 Global, Inc. (NASDAQ:NVEE)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NVEE over the last 17 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Manatuck Hill Partners was the largest shareholder of NV5 Global, Inc. (NASDAQ:NVEE), with a stake worth $10.4 million reported as of the end of September. Trailing Manatuck Hill Partners was Cruiser Capital Advisors, which amassed a stake valued at $5.3 million. Skylands Capital, Lyon Street Capital, and PEAK6 Capital Management 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 Manatuck Hill Partners allocated the biggest weight to NV5 Global, Inc. (NASDAQ:NVEE), around 5.7% of its 13F portfolio. Cruiser Capital Advisors is also relatively very bullish on the stock, dishing out 4.03 percent of its 13F equity portfolio to NVEE.
As one would reasonably expect, key hedge funds have been driving this bullishness. PEAK6 Capital Management, managed by Matthew Hulsizer, initiated the most valuable position in NV5 Global, Inc. (NASDAQ:NVEE). PEAK6 Capital Management had $0.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $0.8 million investment in the stock during the quarter. The other funds with brand new NVEE positions are Donald Sussman’s Paloma Partners and Michael Gelband’s ExodusPoint Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as NV5 Global, Inc. (NASDAQ:NVEE) but similarly valued. These stocks are Amneal Pharmaceuticals, Inc. (NYSE:AMRX), Phreesia, Inc. (NYSE:PHR), Community Healthcare Trust Inc (NYSE:CHCT), and Hecla Mining Company (NYSE:HL). This group of stocks’ market caps are similar to NVEE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMRX | 9 | 8377 | -1 |
| PHR | 9 | 33757 | 9 |
| CHCT | 10 | 88796 | 2 |
| HL | 10 | 22102 | 2 |
| Average | 9.5 | 38258 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $23 million in NVEE’s case. Community Healthcare Trust Inc (NYSE:CHCT) is the most popular stock in this table. On the other hand Amneal Pharmaceuticals, Inc. (NYSE:AMRX) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks NV5 Global, Inc. (NASDAQ:NVEE) is more popular among hedge funds. 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. Unfortunately NVEE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NVEE were disappointed as the stock returned -29.6% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
