Does Neogen Corporation (NASDAQ:NEOG) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Is Neogen Corporation (NASDAQ:NEOG) a healthy stock for your portfolio? The smart money is turning bullish. The number of long hedge fund positions increased by 2 in recent months. Our calculations also showed that NEOG isn’t among the 30 most popular stocks among hedge funds. NEOG was in 14 hedge funds’ portfolios at the end of December. There were 12 hedge funds in our database with NEOG positions at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a peek at the recent hedge fund action encompassing Neogen Corporation (NASDAQ:NEOG).
What have hedge funds been doing with Neogen Corporation (NASDAQ:NEOG)?
At Q4’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in NEOG a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Neogen Corporation (NASDAQ:NEOG) was held by Winton Capital Management, which reported holding $11.1 million worth of stock at the end of September. It was followed by D E Shaw with a $5.4 million position. Other investors bullish on the company included Citadel Investment Group, Marshall Wace LLP, and Arrowstreet Capital.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most valuable position in Neogen Corporation (NASDAQ:NEOG). Marshall Wace LLP had $4 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $1.7 million investment in the stock during the quarter. The only other fund with a new position in the stock is Benjamin A. Smith’s Laurion Capital Management.
Let’s go over hedge fund activity in other stocks similar to Neogen Corporation (NASDAQ:NEOG). We will take a look at Healthcare Services Group, Inc. (NASDAQ:HCSG), Banco Macro SA (NYSE:BMA), Cornerstone OnDemand, Inc. (NASDAQ:CSOD), and TriNet Group Inc (NYSE:TNET). This group of stocks’ market caps match NEOG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HCSG | 12 | 34987 | 1 |
| BMA | 17 | 174348 | 5 |
| CSOD | 31 | 601148 | 3 |
| TNET | 17 | 233555 | -4 |
| Average | 19.25 | 261010 | 1.25 |
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 $261 million. That figure was $41 million in NEOG’s case. Cornerstone OnDemand, Inc. (NASDAQ:CSOD) is the most popular stock in this table. On the other hand Healthcare Services Group, Inc. (NASDAQ:HCSG) is the least popular one with only 12 bullish hedge fund positions. Neogen Corporation (NASDAQ:NEOG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately NEOG wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); NEOG investors were disappointed as the stock returned -1.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
