Is NOA A Good Stock To Buy Now?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on North American Construction Group Ltd. (NYSE:NOA).

Is NOA a good stock to buy now? North American Construction Group Ltd. (NYSE:NOA) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that NOA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). 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 CASI Pharmaceuticals Inc (NASDAQ:CASI), Immersion Corporation (NASDAQ:IMMR), and Rekor Systems, Inc. (NASDAQ:REKR) to gather more data points.

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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

J. Carlo Cannell of Cannell Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s check out the fresh hedge fund action encompassing North American Construction Group Ltd. (NYSE:NOA).

Do Hedge Funds Think NOA Is A Good Stock To Buy Now?

At the end of September, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in NOA over the last 21 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Cannell Capital, managed by J. Carlo Cannell, holds the biggest position in North American Construction Group Ltd. (NYSE:NOA). Cannell Capital has a $17.5 million position in the stock, comprising 6.4% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions contain Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Cannell Capital allocated the biggest weight to North American Construction Group Ltd. (NYSE:NOA), around 6.39% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to NOA.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as North American Construction Group Ltd. (NYSE:NOA) but similarly valued. These stocks are CASI Pharmaceuticals Inc (NASDAQ:CASI), Immersion Corporation (NASDAQ:IMMR), Rekor Systems, Inc. (NASDAQ:REKR), Fluent, Inc. (NASDAQ:FLNT), Secoo Holding Limited (NASDAQ:SECO), Protective Insurance Corporation (NASDAQ:PTVCB), and Regional Management Corp (NYSE:RM). All of these stocks’ market caps are similar to NOA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $23 million in NOA’s case. Immersion Corporation (NASDAQ:IMMR) is the most popular stock in this table. On the other hand Secoo Holding Limited (NASDAQ:SECO) is the least popular one with only 4 bullish hedge fund positions. North American Construction Group Ltd. (NYSE:NOA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NOA is 44.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on NOA as the stock returned 63.2% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.