Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of National Presto Industries Inc. (NYSE:NPK).
Is National Presto Industries Inc. (NYSE:NPK) worth your attention right now? The best stock pickers are in a pessimistic mood. The number of bullish hedge fund positions decreased by 1 lately. Our calculations also showed that NPK 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.
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’ 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 review the key hedge fund action regarding National Presto Industries Inc. (NYSE:NPK).
What does smart money think about National Presto Industries Inc. (NYSE:NPK)?
At Q2’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the first quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in NPK 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.
According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the number one position in National Presto Industries Inc. (NYSE:NPK), worth close to $47.3 million, amounting to 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $12.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish encompass Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.
Judging by the fact that National Presto Industries Inc. (NYSE:NPK) has experienced bearish sentiment from the smart money, it’s safe to say that there exists a select few money managers that decided to sell off their full holdings in the second quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest stake of all the hedgies monitored by Insider Monkey, totaling about $0.9 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also said goodbye to its stock, about $0.4 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds in the second quarter.
Let’s now review hedge fund activity in other stocks similar to National Presto Industries Inc. (NYSE:NPK). These stocks are Front Yard Residential Corporation (NYSE:RESI), Akorn, Inc. (NASDAQ:AKRX), Winmark Corporation (NASDAQ:WINA), and Universal Logistics Holdings, Inc. (NASDAQ:ULH). This group of stocks’ market valuations are closest to NPK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RESI | 11 | 43581 | -6 |
| AKRX | 14 | 116153 | -2 |
| WINA | 6 | 92656 | -1 |
| ULH | 13 | 28485 | 3 |
| Average | 11 | 70219 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $71 million in NPK’s case. Akorn, Inc. (NASDAQ:AKRX) is the most popular stock in this table. On the other hand Winmark Corporation (NASDAQ:WINA) is the least popular one with only 6 bullish hedge fund positions. National Presto Industries Inc. (NYSE:NPK) 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. 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. Unfortunately NPK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NPK were disappointed as the stock returned -4.5% 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.
