We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of June 28th. In this article, we look at what those funds think of National Research Corporation (NASDAQ:NRC) based on that data.
National Research Corporation (NASDAQ:NRC) investors should be aware of an increase in activity from the world's largest hedge funds in recent months. NRC was in 9 hedge funds' portfolios at the end of June. There were 7 hedge funds in our database with NRC holdings at the end of the previous quarter. Our calculations also showed that NRC 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.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 our short portfolio.
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. Let's check out the new hedge fund action regarding National Research Corporation (NASDAQ:NRC).
What does smart money think about National Research Corporation (NASDAQ:NRC)?
At the end of the second quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in NRC over the last 16 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.
The largest stake in National Research Corporation (NASDAQ:NRC) was held by Renaissance Technologies, which reported holding $29.6 million worth of stock at the end of March. It was followed by Royce & Associates with a $12.5 million position. Other investors bullish on the company included Spitfire Capital, Citadel Investment Group, and Winton Capital Management.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, created the largest position in National Research Corporation (NASDAQ:NRC). ExodusPoint Capital had $0.3 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new NRC position is D. E. Shaw's D E Shaw.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as National Research Corporation (NASDAQ:NRC) but similarly valued. These stocks are Industrial Logistics Properties Trust (NASDAQ:ILPT), Shutterstock Inc (NYSE:SSTK), Turning Point Therapeutics, Inc. (NASDAQ:TPTX), and GreenTree Hospitality Group Ltd. (NYSE:GHG). This group of stocks' market caps are closest to NRC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ILPT,9,86585,-7 SSTK,18,89013,1 TPTX,15,323179,15 GHG,5,31776,-4 Average,11.75,132638,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $51 million in NRC's case. Shutterstock Inc (NYSE:SSTK) is the most popular stock in this table. On the other hand GreenTree Hospitality Group Ltd. (NYSE:GHG) is the least popular one with only 5 bullish hedge fund positions. National Research Corporation (NASDAQ:NRC) 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 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 NRC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NRC investors were disappointed as the stock returned 0.6% 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 in 2019.
Disclosure: None. This article was originally published at Insider Monkey.