How National CineMedia, Inc. (NCMI) Stacks Up Against Its Peers?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards National CineMedia, Inc. (NASDAQ:NCMI), and what that likely means for the prospects of the company and its stock.

Is National CineMedia, Inc. (NASDAQ:NCMI) going to take off soon? Money managers are actually actually taking a pessimistic view. The number of bullish hedge fund bets that are revealed through the 13F filings retreated by 1 recently. In this way, there were 12 hedge funds in our database with NCMI holdings at the end of the third quarter. 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 Helix Energy Solutions Group Inc. (NYSE:HLX), At Home Group Inc (NYSE:HOME), and Cato Corp (NYSE:CATO) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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What have hedge funds been doing with National CineMedia, Inc. (NASDAQ:NCMI)?

Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, down by 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NCMI over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Wallace Weitz’s Wallace R. Weitz & Co. has the biggest position in National CineMedia, Inc. (NASDAQ:NCMI), worth close to $26.1 million, accounting for 1% of its total 13F portfolio. On Wallace R. Weitz & Co.’s heels is Cardinal Capital, led by Amy Minella, holding a $19.6 million position. Remaining hedge funds and institutional investors that are bullish consist of Jim Simons’ Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually dropped their positions entirely. Intriguingly, Millennium Management, one of the 10 largest hedge funds in the world, dropped the largest position of all the hedgies monitored by Insider Monkey, totaling about $1.5 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also said goodbye to its stock, about $0.6 million worth.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as National CineMedia, Inc. (NASDAQ:NCMI) but similarly valued. These stocks are Helix Energy Solutions Group Inc. (NYSE:HLX), At Home Group Inc (NYSE:HOME), Cato Corp (NYSE:CATO), and Rofin-Sinar Technologies (NASDAQ:RSTI). This group of stocks’ market valuations resemble NCMI’s market valuation.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $67 million in NCMI’s case. Helix Energy Solutions Group Inc. (NYSE:HLX) is the most popular stock in this table. On the other hand At Home Group Inc (NYSE:HOME) is the least popular one with only 5 bullish hedge fund positions. National CineMedia, Inc. (NASDAQ:NCMI) 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 HLX might be a better candidate to consider taking a long position in.

Disclosure: None