Is Nordic American Tanker Ltd (NYSE:NAT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in Nordic American Tanker Ltd (NYSE:NAT) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare NAT to other stocks including Gold Resource Corporation (NYSEAMEX:GORO), Axovant Sciences Ltd (NYSE:AXON), and Capital Senior Living Corporation (NYSE:CSU) to get a better sense of its popularity.
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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the fresh hedge fund action regarding Nordic American Tanker Ltd (NYSE:NAT).
How have hedgies been trading Nordic American Tanker Ltd (NYSE:NAT)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from the previous quarter. The graph below displays the number of hedge funds with bullish position in NAT over the last 13 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Nordic American Tanker Ltd (NYSE:NAT) was held by Carlson Capital, which reported holding $2.7 million worth of stock at the end of September. It was followed by Rubric Capital Management with a $0.6 million position. Other investors bullish on the company included 683 Capital Partners, QVT Financial, and Citadel Investment Group.
Due to the fact that Nordic American Tanker Ltd (NYSE:NAT) has faced declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of funds that elected to cut their entire stakes heading into Q3. Intriguingly, Jim Simons’s Renaissance Technologies dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at close to $0.1 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund sold off about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Nordic American Tanker Ltd (NYSE:NAT) but similarly valued. These stocks are Gold Resource Corporation (NYSEAMEX:GORO), Axovant Sciences Ltd (NASDAQ:AXON), Capital Senior Living Corporation (NYSE:CSU), and Fluidigm Corporation (NASDAQ:FLDM). This group of stocks’ market values are similar to NAT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GORO | 7 | 10926 | -3 |
| AXON | 9 | 11864 | -2 |
| CSU | 13 | 108111 | 0 |
| FLDM | 12 | 105217 | 0 |
| Average | 10.25 | 59030 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $5 million in NAT’s case. Capital Senior Living Corporation (NYSE:CSU) is the most popular stock in this table. On the other hand Gold Resource Corporation (NYSEAMEX:GORO) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Nordic American Tanker Ltd (NYSE:NAT) is even less popular than GORO. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.
