We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. 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 Quanex Building Products Corporation (NYSE:NX).
Quanex Building Products Corporation (NYSE:NX) shareholders have witnessed a decrease in hedge fund interest recently. Our calculations also showed that NX isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are plenty of gauges shareholders use to appraise stocks. Two of the most underrated gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite money managers can trounce the market by a solid margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the new hedge fund action regarding Quanex Building Products Corporation (NYSE:NX).
How have hedgies been trading Quanex Building Products Corporation (NYSE:NX)?
At Q2's end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in NX a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the largest position in Quanex Building Products Corporation (NYSE:NX), worth close to $16.4 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which holds a $12.1 million position; 0.1% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish encompass D. E. Shaw's D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Ken Griffin's Citadel Investment Group.
Since Quanex Building Products Corporation (NYSE:NX) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of fund managers that decided to sell off their entire stakes in the second quarter. It's worth mentioning that Andrew Feldstein and Stephen Siderow's Blue Mountain Capital dropped the largest stake of the "upper crust" of funds watched by Insider Monkey, worth an estimated $0.6 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund dumped about $0.5 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds in the second quarter.
Let's check out hedge fund activity in other stocks similar to Quanex Building Products Corporation (NYSE:NX). We will take a look at First Foundation Inc (NASDAQ:FFWM), Movado Group, Inc (NYSE:MOV), Viomi Technology Co., Ltd (NASDAQ:VIOT), and Corindus Vascular Robotics Inc (NYSE:CVRS). All of these stocks' market caps match NX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FFWM,10,77057,-1 MOV,20,42693,-3 VIOT,3,24349,0 CVRS,9,143517,1 Average,10.5,71904,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $51 million in NX's case. Movado Group, Inc (NYSE:MOV) is the most popular stock in this table. On the other hand Viomi Technology Co., Ltd (NASDAQ:VIOT) is the least popular one with only 3 bullish hedge fund positions. Quanex Building Products Corporation (NYSE:NX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NX were disappointed as the stock returned -3.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.