We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB).
Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) has seen a decrease in hedge fund interest of late. OMAB was in 6 hedge funds’ portfolios at the end of December. There were 7 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 (click for Q4 rankings and see the video at the end of this article for Q3 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 41 percentage points since March 2017 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Richard Driehaus of Driehaus Capital
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to check out the fresh 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 first quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the third quarter of 2019. On the other hand, there were a total of 5 hedge funds with a bullish position in OMAB a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB), with a stake worth $52.3 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $11.4 million. Millennium Management, Driehaus Capital, and Qtron Investments 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 Qtron Investments allocated the biggest weight to Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB), around 0.38% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to OMAB.
Because Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) has witnessed a decline in interest from the smart money, it’s easy to see that there was a specific group of fund managers that slashed their entire stakes in the third quarter. Interestingly, Minhua Zhang’s Weld Capital Management dumped the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $0.5 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dropped about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB). We will take a look at Appian Corporation (NASDAQ:APPN), WW International, Inc. (NASDAQ:WW), AAON, Inc. (NASDAQ:AAON), and Tower Semiconductor Ltd. (NASDAQ:TSEM). This group of stocks’ market values are closest to OMAB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APPN | 17 | 380631 | -2 |
| WW | 37 | 514487 | 6 |
| AAON | 7 | 11949 | 0 |
| TSEM | 16 | 431900 | 2 |
| Average | 19.25 | 334742 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $335 million. That figure was $68 million in OMAB’s case. WW International, Inc. (NASDAQ:WW) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 7 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 AAON. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but managed to beat the market by 4.2 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 -58.6% during the same time period 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 most of these stocks already outperformed the market so far in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
