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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 have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Navios Maritime Holdings Inc. (NYSE:NM) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Navios Maritime Holdings Inc. (NYSE:NM) has experienced an increase in enthusiasm from smart money lately. Navios Maritime Holdings Inc. (NYSE:NM) was in 5 hedge funds' portfolios at the end of March. The all time high for this statistic is 9. Our calculations also showed that NM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 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 115 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.
Gavin Saitowitz of Prelude Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to view the key hedge fund action encompassing Navios Maritime Holdings Inc. (NYSE:NM).
Do Hedge Funds Think NM Is A Good Stock To Buy Now?
At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 400% from the fourth quarter of 2020. By comparison, 3 hedge funds held shares or bullish call options in NM a year ago. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Navios Maritime Holdings Inc. (NYSE:NM) was held by Renaissance Technologies, which reported holding $7.4 million worth of stock at the end of December. It was followed by Prelude Capital (previously Springbok Capital) with a $0.6 million position. Other investors bullish on the company included Arrowstreet Capital, Citadel Investment Group, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Prelude Capital (previously Springbok Capital) allocated the biggest weight to Navios Maritime Holdings Inc. (NYSE:NM), around 0.02% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to NM.
Now, some big names have been driving this bullishness. Prelude Capital (previously Springbok Capital), managed by Gavin Saitowitz and Cisco J. del Valle, assembled the largest position in Navios Maritime Holdings Inc. (NYSE:NM). Prelude Capital (previously Springbok Capital) had $0.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also made a $0.6 million investment in the stock during the quarter. The following funds were also among the new NM investors: Ken Griffin's Citadel Investment Group, Ken Griffin's Citadel Investment Group, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's now review hedge fund activity in other stocks similar to Navios Maritime Holdings Inc. (NYSE:NM). These stocks are Orgenesis Inc. (NASDAQ:ORGS), United Security Bancshares (NASDAQ:UBFO), Radcom Ltd. (NASDAQ:RDCM), ACRES Commercial Realty Corp. (NYSE:ACR), Grindrod Shipping Holdings Ltd. (NASDAQ:GRIN), Northern Technologies International Corp (NASDAQ:NTIC), and Powerbridge Technologies Co., Ltd. (NASDAQ:PBTS). This group of stocks' market valuations are similar to NM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ORGS,3,1715,1 UBFO,2,1717,-1 RDCM,3,10000,0 ACR,5,16149,-4 GRIN,2,8427,1 NTIC,3,8102,-2 PBTS,2,109,1 Average,2.9,6603,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.9 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $9 million in NM's case. ACRES Commercial Realty Corp. (NYSE:ACR) is the most popular stock in this table. On the other hand United Security Bancshares (NASDAQ:UBFO) is the least popular one with only 2 bullish hedge fund positions. Navios Maritime Holdings Inc. (NYSE:NM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NM is 75.7. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately NM wasn't nearly as popular as these 5 stocks and hedge funds that were betting on NM were disappointed as the stock returned -8.7% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.