It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC).
Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) has experienced an increase in activity from the world’s largest hedge funds of late. NGVC was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 5 hedge funds in our database with NGVC holdings at the end of the second quarter. 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 Landcadia Holdings Inc. (NASDAQ:LCAHU), Easterly Acquisition Corp (NASDAQ:EACQ), and Hovnanian Enterprises, Inc. (NYSE:HOV) to gather more data points.
Follow Natural Grocers By Vitamin Cottage Inc. (NYSE:NGVC)
Follow Natural Grocers By Vitamin Cottage Inc. (NYSE:NGVC)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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What does the smart money think about Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a 20% increase from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NGVC over the last 5 quarters, which is in the process of making a V-shaped pattern. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Royce & Associates, led by Chuck Royce, holds the most valuable position in Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC). Royce & Associates has a $3.4 million position in the stock. On Royce & Associates’ heels is Jim Simons’ Renaissance Technologies, with a $3.3 million position. Other hedge funds and institutional investors that are bullish comprise Steve Cohen’s Point72 Asset Management, D E Shaw, one of the biggest hedge funds in the world, and Ken Griffin’s Citadel Investment Group. 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-micro-cap stocks.
With general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Citadel Investment Group created the most valuable position in Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC). Citadel Investment Group had $0.6 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 Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC). We will take a look at Landcadia Holdings Inc. (NASDAQ:LCAHU), Easterly Acquisition Corp (NASDAQ:EACQ), Hovnanian Enterprises, Inc. (NYSE:HOV), and Trinity Place Holdings Inc. (NYSE:TPHS). All of these stocks’ market caps resemble NGVC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LCAHU | 14 | 158796 | 2 |
| EACQ | 11 | 78069 | 0 |
| HOV | 10 | 13243 | 1 |
| TPHS | 4 | 83372 | 0 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $11 million in NGVC’s case. Landcadia Holdings Inc. (NASDAQ:LCAHU) is the most popular stock in this table. On the other hand Trinity Place Holdings Inc. (NYSE:TPHS) is the least popular one with only 4 bullish hedge fund positions. Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) 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 LCAHU might be a better candidate to consider taking a long position in.
Disclosure: None
