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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks aren't doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Nam Tai Property Inc (NYSE:NTP) changed recently.
Nam Tai Property Inc (NYSE:NTP) was in 4 hedge funds' portfolios at the end of September. The all time high for this statistics is 10. NTP has seen a decrease in hedge fund interest lately. There were 6 hedge funds in our database with NTP positions at the end of the second quarter. Our calculations also showed that NTP isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
William Martin of Raging Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's take a peek at the fresh hedge fund action encompassing Nam Tai Property Inc (NYSE:NTP).
What have hedge funds been doing with Nam Tai Property Inc (NYSE:NTP)?
At the end of September, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NTP over the last 21 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Kahn Brothers has the number one position in Nam Tai Property Inc (NYSE:NTP), worth close to $16.1 million, accounting for 3.1% of its total 13F portfolio. Coming in second is William C. Martin of Raging Capital Management, with a $3.3 million position; 3.2% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions comprise Michael M. Rothenberg's Moab Capital Partners, Phil Frohlich's Prescott Group Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Raging Capital Management allocated the biggest weight to Nam Tai Property Inc (NYSE:NTP), around 3.19% of its 13F portfolio. Kahn Brothers is also relatively very bullish on the stock, designating 3.06 percent of its 13F equity portfolio to NTP.
Because Nam Tai Property Inc (NYSE:NTP) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain "tier" of hedgies who sold off their full holdings by the end of the third quarter. Interestingly, Brian Sheehy's Iszo Capital sold off the largest stake of all the hedgies followed by Insider Monkey, worth close to $23.8 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund sold off about $0.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to Nam Tai Property Inc (NYSE:NTP). These stocks are Ovid Therapeutics Inc. (NASDAQ:OVID), NI Holdings, Inc. (NASDAQ:NODK), Caleres Inc (NYSE:CAL), Helix Energy Solutions Group Inc. (NYSE:HLX), Tuscan Holdings Corp. (NASDAQ:THCB), Benefitfocus Inc (NASDAQ:BNFT), and Alexco Resource Corp. (NYSE:AXU). This group of stocks' market valuations match NTP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OVID,15,39390,4 NODK,5,24232,-1 CAL,17,30223,2 HLX,14,16489,4 THCB,12,71112,2 BNFT,18,54294,5 AXU,2,671,-3 Average,11.9,33773,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $23 million in NTP's case. Benefitfocus Inc (NASDAQ:BNFT) is the most popular stock in this table. On the other hand Alexco Resource Corp. (NYSE:AXU) is the least popular one with only 2 bullish hedge fund positions. Nam Tai Property Inc (NYSE:NTP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NTP is 21.3. 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. This is a slightly negative signal and 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately NTP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NTP investors were disappointed as the stock returned -46.4% since the end of September (through 11/27) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.