Should You Avoid National Beverage Corp. (FIZZ)?

·5 min read

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of National Beverage Corp. (NASDAQ:FIZZ).

National Beverage Corp. (NASDAQ:FIZZ) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. Our calculations also showed that FIZZ isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

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Philippe Laffont of Coatue Management[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the latest hedge fund action surrounding National Beverage Corp. (NASDAQ:FIZZ).

Hedge fund activity in National Beverage Corp. (NASDAQ:FIZZ)

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FIZZ over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FIZZ A Good Stock To Buy?
Is FIZZ A Good Stock To Buy?

The largest stake in National Beverage Corp. (NASDAQ:FIZZ) was held by Renaissance Technologies, which reported holding $112.9 million worth of stock at the end of September. It was followed by Yost Capital Management with a $17.2 million position. Other investors bullish on the company included GMT Capital, GAMCO Investors, and SG Capital Management. In terms of the portfolio weights assigned to each position Yost Capital Management allocated the biggest weight to National Beverage Corp. (NASDAQ:FIZZ), around 16.25% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, designating 3.41 percent of its 13F equity portfolio to FIZZ.

Because National Beverage Corp. (NASDAQ:FIZZ) has experienced falling interest from the smart money, it's safe to say that there was a specific group of funds who sold off their full holdings in the first quarter. Intriguingly, Dmitry Balyasny's Balyasny Asset Management said goodbye to the biggest investment of the "upper crust" of funds tracked by Insider Monkey, comprising close to $19 million in stock. Minhua Zhang's fund, Weld Capital Management, also cut its stock, about $1.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds in the first quarter.

Let's go over hedge fund activity in other stocks similar to National Beverage Corp. (NASDAQ:FIZZ). These stocks are Stepan Company (NYSE:SCL), BancorpSouth, Inc. (NYSE:BXS), Investors Bancorp, Inc. (NASDAQ:ISBC), and Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN). This group of stocks' market caps are closest to FIZZ's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCL,10,48020,-3 BXS,15,36662,1 ISBC,26,136450,-4 BHVN,29,390989,-6 Average,20,153030,-3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $202 million in FIZZ's case. Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN) is the most popular stock in this table. On the other hand Stepan Company (NYSE:SCL) is the least popular one with only 10 bullish hedge fund positions. National Beverage Corp. (NASDAQ:FIZZ) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on FIZZ as the stock returned 48.5% during the second quarter and outperformed the market by an even larger margin.

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

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