We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Navios Maritime Partners L.P. (NYSE:NMM) based on that data.
Hedge fund interest in Navios Maritime Partners L.P. (NYSE:NMM) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Coda Octopus Group, Inc. (NASDAQ:CODA), Extraction Oil & Gas, Inc. (NASDAQ:XOG), and Wayside Technology Group, Inc. (NASDAQ:WSTG) to gather more data points. Our calculations also showed that NMM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the recent hedge fund action encompassing Navios Maritime Partners L.P. (NYSE:NMM).
Hedge fund activity in Navios Maritime Partners L.P. (NYSE:NMM)
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 4 hedge funds held shares or bullish call options in NMM a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Navios Maritime Partners L.P. (NYSE:NMM), which was worth $0.4 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $0.3 million worth of shares. PEAK6 Capital Management, Citadel Investment Group, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Arrowstreet Capital allocated the biggest weight to Navios Maritime Partners L.P. (NYSE:NMM), around 0.0011% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, setting aside 0.001 percent of its 13F equity portfolio to NMM.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Marshall Wace LLP. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Millennium Management).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Navios Maritime Partners L.P. (NYSE:NMM) but similarly valued. These stocks are Coda Octopus Group, Inc. (NASDAQ:CODA), Extraction Oil & Gas, Inc. (NASDAQ:XOG), Wayside Technology Group, Inc. (NASDAQ:WSTG), and Computer Task Group, Inc. (NASDAQ:CTG). This group of stocks’ market valuations are closest to NMM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CODA | 3 | 736 | -1 |
| XOG | 6 | 3834 | -6 |
| WSTG | 2 | 4150 | 0 |
| CTG | 7 | 9934 | 1 |
| Average | 4.5 | 4664 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $1 million in NMM’s case. Computer Task Group, Inc. (NASDAQ:CTG) is the most popular stock in this table. On the other hand Wayside Technology Group, Inc. (NASDAQ:WSTG) is the least popular one with only 2 bullish hedge fund positions. Navios Maritime Partners L.P. (NYSE:NMM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on NMM as the stock returned 31.1% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
