Is NN, Inc. (NNBR) A Good Stock To Buy?

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.

Is NN, Inc. (NASDAQ:NNBR) a buy, sell, or hold? The best stock pickers are really becoming hopeful. The number of long hedge fund bets that are revealed through the 13F filings went up by 1 lately. There were 6 hedge funds in our database with NNBR positions at the end of the previous quarter. At the end of this article we will also compare NNBR to other stocks including First Financial Corp (NASDAQ:THFF), Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL), and Movado Group, Inc (NYSE:MOV) to get a better sense of its popularity.

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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With all of this in mind, we’re going to view the new action regarding NN, Inc. (NASDAQ:NNBR).

What have hedge funds been doing with NN, Inc. (NASDAQ:NNBR)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NNBR over the last 5 quarters. 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in NN, Inc. (NASDAQ:NNBR), worth close to $19.2 million, amounting to 0.1% of its total 13F portfolio. On Royce & Associates’s heels is ACK Asset Management, led by Richard S. Meisenberg, which holds a $13.2 million position; 4% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism consist of Charles Paquelet’s Skylands Capital, Paul Hondros’s AlphaOne Capital Partners and D E Shaw, one of the biggest hedge funds in the world. 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.

As aggregate interest increased, key money managers have jumped into NN, Inc. (NASDAQ:NNBR) headfirst. SG Capital Management, led by Ken Grossman and Glen Schneider, created the most valuable position in NN, Inc. (NASDAQ:NNBR). SG Capital Management had $1.1 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to NN, Inc. (NASDAQ:NNBR). We will take a look at First Financial Corp (NASDAQ:THFF), Alpha and Omega Semiconductor Ltd (NASDAQ:AOSL), Movado Group, Inc (NYSE:MOV), and FutureFuel Corp. (NYSE:FF). This group of stocks’ market values are similar to NNBR’s market value.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $47 million in NNBR’s case. Movado Group, Inc (NYSE:MOV) is the most popular stock in this table. On the other hand First Financial Corp (NASDAQ:THFF) is the least popular one with only 5 bullish hedge fund positions. NN, Inc. (NASDAQ:NNBR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MOV might be a better candidate to consider taking a long position in.