Nathan’s Famous, Inc. (NATH) Fell Out Of Favor With Hedge Funds

We at Insider Monkey have gone over 866 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. In this article, we look at what those funds think of Nathan’s Famous, Inc. (NASDAQ:NATH) based on that data.

Nathan’s Famous, Inc. (NASDAQ:NATH) shareholders have witnessed a decrease in enthusiasm from smart money lately. Nathan’s Famous, Inc. (NASDAQ:NATH) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. There were 6 hedge funds in our database with NATH holdings at the end of December. Our calculations also showed that NATH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Michael Price of MFP Investors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a look at the latest hedge fund action surrounding Nathan’s Famous, Inc. (NASDAQ:NATH).

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

Heading into the second quarter of 2021, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in NATH over the last 23 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the biggest position in Nathan’s Famous, Inc. (NASDAQ:NATH), worth close to $14.5 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is GAMCO Investors, managed by Mario Gabelli, which holds a $14.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers with similar optimism consist of Michael Price’s MFP Investors, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Nathan’s Famous, Inc. (NASDAQ:NATH), around 0.13% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to NATH.

Due to the fact that Nathan’s Famous, Inc. (NASDAQ:NATH) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedgies that decided to sell off their positions entirely last quarter. It’s worth mentioning that Noam Gottesman’s GLG Partners dumped the biggest stake of the 750 funds watched by Insider Monkey, valued at close to $0.3 million in stock. Mark Travis’s fund, Intrepid Capital Management, also dropped its stock, about $0.2 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Nathan’s Famous, Inc. (NASDAQ:NATH). We will take a look at Akumin Inc. (NASDAQ:AKU), X Financial (NYSE:XYF), Atlantic Power Corp (NYSE:AT), Ciner Resources LP (NYSE:CINR), RedHill Biopharma Ltd (NASDAQ:RDHL), Ondas Holdings Inc. (NASDAQ:ONDS), and AGM Group Holdings Inc. (NASDAQ:AGMH). This group of stocks’ market valuations are similar to NATH’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $30 million in NATH’s case. Atlantic Power Corp (NYSE:AT) is the most popular stock in this table. On the other hand Ciner Resources LP (NYSE:CINR) is the least popular one with only 1 bullish hedge fund positions. Nathan’s Famous, Inc. (NASDAQ:NATH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NATH is 27.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on NATH as the stock returned 11.1% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

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