The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Nam Tai Property Inc (NYSE:NTP).
Is Nam Tai Property Inc (NYSE:NTP) undervalued? Hedge funds are reducing their bets on the stock. The number of long hedge fund bets were cut by 2 lately. Our calculations also showed that NTP 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). NTP was in 6 hedge funds' portfolios at the end of March. There were 8 hedge funds in our database with NTP holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_339344" align="aligncenter" width="399"] William Martin of Raging Capital 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 stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind let's analyze the key hedge fund action regarding Nam Tai Property Inc (NYSE:NTP).
What have hedge funds been doing with Nam Tai Property Inc (NYSE:NTP)?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in NTP over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
The largest stake in Nam Tai Property Inc (NYSE:NTP) was held by Iszo Capital, which reported holding $21 million worth of stock at the end of September. It was followed by Kahn Brothers with a $10.8 million position. Other investors bullish on the company included Prescott Group Capital Management, Raging Capital Management, and Moab Capital Partners. In terms of the portfolio weights assigned to each position Iszo Capital allocated the biggest weight to Nam Tai Property Inc (NYSE:NTP), around 32.21% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, earmarking 1.98 percent of its 13F equity portfolio to NTP.
Since Nam Tai Property Inc (NYSE:NTP) has experienced declining sentiment from hedge fund managers, we can see that there were a few hedgies who sold off their full holdings heading into Q4. It's worth mentioning that David Brown's Hawk Ridge Management sold off the biggest stake of all the hedgies watched by Insider Monkey, valued at close to $13.2 million in stock, and Cliff Asness's AQR Capital Management was right behind this move, as the fund dropped about $0.1 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks similar to Nam Tai Property Inc (NYSE:NTP). We will take a look at Veru Inc. (NASDAQ:VERU), New Senior Investment Group Inc (NYSE:SNR), Capital Southwest Corporation (NASDAQ:CSWC), and Gritstone Oncology, Inc. (NASDAQ:GRTS). This group of stocks' market caps are similar to NTP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VERU,8,12593,1 SNR,10,33204,-5 CSWC,7,10362,-6 GRTS,7,44260,1 Average,8,25105,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $39 million in NTP's case. New Senior Investment Group Inc (NYSE:SNR) is the most popular stock in this table. On the other hand Capital Southwest Corporation (NASDAQ:CSWC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Nam Tai Property Inc (NYSE:NTP) is even less popular than CSWC. 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 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on NTP, though not to the same extent, as the stock returned 24.9% during the second quarter (through June 10th) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.