Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018 as investors first worried over the possible ramifications of rising interest rates and the escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only about 60% S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of National Beverage Corp. (NASDAQ:FIZZ) and see how the stock is affected by the recent hedge fund activity.
Is National Beverage Corp. (NASDAQ:FIZZ) ready to rally soon? The smart money is becoming less confident. The number of long hedge fund bets decreased by 7 lately. Our calculations also showed that FIZZ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the latest hedge fund action surrounding National Beverage Corp. (NASDAQ:FIZZ).
What have hedge funds been doing with National Beverage Corp. (NASDAQ:FIZZ)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -32% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in FIZZ a year ago. So, let’s examine 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, Renaissance Technologies has the number one position in National Beverage Corp. (NASDAQ:FIZZ), worth close to $127.2 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Noam Gottesman of GLG Partners, with a $27.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions comprise Thomas E. Claugus’s GMT Capital, James Woodson Davis’s Woodson Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Woodson Capital Management allocated the biggest weight to National Beverage Corp. (NASDAQ:FIZZ), around 3.45% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, earmarking 3.04 percent of its 13F equity portfolio to FIZZ.
Due to the fact that National Beverage Corp. (NASDAQ:FIZZ) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely by the end of the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest stake of all the hedgies watched by Insider Monkey, worth close to $12.9 million in stock. Ken Fisher’s fund, Fisher Asset Management, also cut its stock, about $2.5 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 7 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as National Beverage Corp. (NASDAQ:FIZZ) but similarly valued. These stocks are Everbridge, Inc. (NASDAQ:EVBG), SeaWorld Entertainment Inc (NYSE:SEAS), Alliance Resource Partners, L.P. (NASDAQ:ARLP), and Corrections Corp Of America (NYSE:CXW). This group of stocks’ market values are similar to FIZZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EVBG | 27 | 409477 | -1 |
| SEAS | 32 | 998661 | 0 |
| ARLP | 7 | 89565 | -2 |
| CXW | 17 | 173840 | 3 |
| Average | 20.75 | 417886 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $418 million. That figure was $287 million in FIZZ’s case. SeaWorld Entertainment Inc (NYSE:SEAS) is the most popular stock in this table. On the other hand Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the least popular one with only 7 bullish hedge fund positions. National Beverage Corp. (NASDAQ:FIZZ) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on FIZZ as the stock returned 11.9% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
