Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
In this article, we’ll discuss the latest hedge fund activity surrounding National Presto Industries Inc. (NYSE:NPK), in which 12 funds from our database held shares at the end of the third quarter of 2016. At the end of this article we will also compare NPK to other stocks including TriCo Bancshares (NASDAQ:TCBK), Green Plains Partners LP (NASDAQ:GPP), and Crocs, Inc. (NASDAQ:CROX) to get a better sense of its popularity.
Follow National Presto Industries Inc (NYSE:NPK)
Follow National Presto Industries Inc (NYSE:NPK)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to take a peek at the recent action regarding National Presto Industries Inc. (NYSE:NPK).
What does the smart money think about National Presto Industries Inc. (NYSE:NPK)?
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 one fund from the end of the second quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in NPK at the beginning of this year. So, let’s find 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, Royce & Associates, led by Chuck Royce, holds the largest position in National Presto Industries Inc. (NYSE:NPK). Royce & Associates has a $54.4 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is MFP Investors, led by Michael Price, which holds a $6.6 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Renaissance Technologies, one of the largest hedge funds in the world, and Cliff Asness’ AQR Capital Management. We should note that MFP Investors is 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 view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Highbridge Capital Management. 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 NPK as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as National Presto Industries Inc. (NYSE:NPK) but similarly valued. We will take a look at TriCo Bancshares (NASDAQ:TCBK), Green Plains Partners LP (NASDAQ:GPP), Crocs, Inc. (NASDAQ:CROX), and CTS Corporation (NYSE:CTS). All of these stocks’ market caps resemble NPK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCBK | 7 | 27881 | 1 |
| GPP | 5 | 83207 | 0 |
| CROX | 10 | 37086 | 2 |
| CTS | 4 | 76463 | -2 |
As you can see these stocks had an average of seven hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $81 million in NPK’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand CTS Corporation (NYSE:CTS) is the least popular one with only four bullish hedge fund positions. Compared to these stocks National Presto Industries Inc. (NYSE:NPK) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: none
