At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
National Research Corporation (NASDAQ:NRC) investors should pay attention to a decrease in support from the world’s most elite money managers of late. NRC was in 5 hedge funds’ portfolios at the end of December. There were 6 hedge funds in our database with NRC positions at the end of the previous quarter. Our calculations also showed that nrc isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most stock holders, hedge funds are seen as slow, old financial vehicles of yesteryear. While there are more than 8000 funds trading today, Our researchers look at the crème de la crème of this group, about 750 funds. These money managers handle the lion’s share of all hedge funds’ total capital, and by watching their unrivaled picks, Insider Monkey has discovered numerous investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
We’re going to check out the recent hedge fund action encompassing National Research Corporation (NASDAQ:NRC).
What does the smart money think about National Research Corporation (NASDAQ:NRC)?
Heading into the first quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the second quarter of 2018. On the other hand, there were a total of 3 hedge funds with a bullish position in NRC a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of National Research Corporation (NASDAQ:NRC), with a stake worth $18 million reported as of the end of December. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $8.6 million. Spitfire Capital, Zebra Capital Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Tudor Investment Corp. 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 NRC as a viable investment and initiated a position in the stock.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as National Research Corporation (NASDAQ:NRC) but similarly valued. We will take a look at Pacific Biosciences of California, Inc. (NASDAQ:PACB), MRC Global Inc (NYSE:MRC), Cooper-Standard Holdings Inc (NYSE:CPS), and PRA Group, Inc. (NASDAQ:PRAA). This group of stocks’ market valuations are closest to NRC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PACB | 21 | 210649 | 5 |
| MRC | 15 | 112930 | -2 |
| CPS | 17 | 43113 | -8 |
| PRAA | 10 | 87363 | 3 |
| Average | 15.75 | 113514 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $32 million in NRC’s case. Pacific Biosciences of California, Inc. (NASDAQ:PACB) is the most popular stock in this table. On the other hand PRA Group, Inc. (NASDAQ:PRAA) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks National Research Corporation (NASDAQ:NRC) is even less popular than PRAA. Hedge funds dodged a bullet by taking a bearish stance towards NRC. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately NRC wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); NRC investors were disappointed as the stock returned 1.5% 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.