Do Hedge Funds Love Nathan’s Famous, Inc. (NATH)?
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 Nathan's Famous, Inc. (NASDAQ:NATH).
Nathan's Famous, Inc. (NASDAQ:NATH) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds' portfolios at the end of the first quarter of 2020. At the end of this article we will also compare NATH to other stocks including Oil-Dri Corporation of America (NYSE:ODC), Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI), and Landec Corporation (NASDAQ:LNDC) to get a better sense of its popularity.
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 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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Noam Gottesman of GLG Partners[/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. With all of this in mind we're going to take a peek at the fresh hedge fund action surrounding Nathan's Famous, Inc. (NASDAQ:NATH).
How are hedge funds trading Nathan's Famous, Inc. (NASDAQ:NATH)?
At Q1's end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NATH over the last 18 quarters. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Nathan's Famous, Inc. (NASDAQ:NATH) was held by GAMCO Investors, which reported holding $15.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $14.9 million position. Other investors bullish on the company included GLG Partners, Intrepid Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Intrepid Capital Management allocated the biggest weight to Nathan's Famous, Inc. (NASDAQ:NATH), around 0.19% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, setting aside 0.18 percent of its 13F equity portfolio to NATH.
Because Nathan's Famous, Inc. (NASDAQ:NATH) has faced declining sentiment from the smart money, we can see that there were a few money managers who sold off their positions entirely last quarter. At the top of the heap, John Overdeck and David Siegel's Two Sigma Advisors dumped the biggest position of the "upper crust" of funds followed by Insider Monkey, worth an estimated $0.2 million in stock, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital was right behind this move, as the fund said goodbye to about $0 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Nathan's Famous, Inc. (NASDAQ:NATH) but similarly valued. These stocks are Oil-Dri Corporation of America (NYSE:ODC), Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI), Landec Corporation (NASDAQ:LNDC), and Gladstone Land Corporation (NASDAQ:LAND). All of these stocks' market caps match NATH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ODC,4,30530,1 ACBI,14,37356,0 LNDC,15,58125,3 LAND,8,9231,1 Average,10.25,33811,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $31 million in NATH's case. Landec Corporation (NASDAQ:LNDC) is the most popular stock in this table. On the other hand Oil-Dri Corporation of America (NYSE:ODC) is the least popular one with only 4 bullish hedge fund positions. Nathan's Famous, Inc. (NASDAQ:NATH) 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. 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately NATH wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); NATH investors were disappointed as the stock returned -8.1% during the second 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 10 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.
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