Here is What Hedge Funds Think About Northrim BanCorp, Inc. (NRIM)

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 5.2% during the last 12 months ending October 30, 2015. Less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 S&P 500 stocks among hedge funds at the end of September 2014 had an average return of 9.5% during the same period. Sixty three percent of these 30 stocks outperformed the market. Hedge funds had bad stock picks like everyone else. Micron, which lost 50% over this period, was one of hedge funds’ 30 favorite S&P 500 stocks. Anadarko Petroleum was another failed stock pick which lost more than 26%. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about Northrim BanCorp, Inc. (NASDAQ:NRIM).

Is Northrim BanCorp, Inc. (NASDAQ:NRIM) a good investment today? The best stock pickers seem to have some concerns regarding the stock, since just seven funds among those we track held long positions in the company at the end of September, down by one over the quarter. However, 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 Denison Mines Corp (USA) (NYSEMKT:DNN), Control4 Corp (NASDAQ:CTRL), and Mattersight Corporation (NASDAQ:MATR) to gather more data points.

To most stock holders, hedge funds are perceived as worthless, old financial vehicles of years past. While there are more than an 8000 funds with their doors open at the moment, Our researchers look at the moguls of this club, about 700 funds. These hedge fund managers handle the lion’s share of the smart money’s total asset base, and by shadowing their first-class investments, Insider Monkey has come up with several investment strategies that have historically surpassed Mr. Market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, let’s check out the recent action surrounding Northrim BanCorp, Inc. (NASDAQ:NRIM).

What have hedge funds been doing with Northrim BanCorp, Inc. (NASDAQ:NRIM)?

Despite the slight decline in sentiment, a number of funds still hold considerable stakes in NRIM, according to the last round of 13F filings. When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Northrim BanCorp, Inc. (NASDAQ:NRIM), worth close to $13.7 million, comprising 0.1% of its total 13F portfolio. Coming in second is Gregg J. Powers’s Private Capital Management, with a $4.5 million position; 0.5% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish contain Jim Simons’ Renaissance Technologies, Israel Englander’s Millennium Management and John Overdeck, and David Siegel’s Two Sigma Advisors.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Harvest Capital Strategies. 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 none of the 700+ hedge funds tracked by Insider Monkey identified NRIM as a viable investment and initiated a position in the stock.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Northrim BanCorp, Inc. (NASDAQ:NRIM) but similarly valued. We will take a look at Denison Mines Corp (USA) (NYSEMKT:DNN), Control4 Corp (NASDAQ:CTRL), Mattersight Corporation (NASDAQ:MATR), and Alliance One International, Inc. (NYSE:AOI). This group of stocks’ market values match NRIM’s market value.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $20 million, compared to $22 million in NRIM’s case. Alliance One International, Inc. (NYSE:AOI) is the most popular stock in this table. On the other hand Denison Mines Corp (USA) (NYSEMKT:DNN) is the least popular one with only 4 bullish hedge fund positions. Northrim BanCorp, Inc. (NASDAQ:NRIM) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AOI might be a better candidate to consider a long position.