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Hedge Funds Have Never Been This Bullish On North American Construction Group Ltd. (NOA)

Nina Todic

Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018 as investors first worried over the possible ramifications of rising interest rates and the escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only about 60% S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of North American Construction Group Ltd. (NYSE:NOA) and see how the stock is affected by the recent hedge fund activity.

North American Construction Group Ltd. (NYSE:NOA) has experienced an increase in hedge fund sentiment recently. Our calculations also showed that NOA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Today there are a large number of formulas stock traders put to use to appraise publicly traded companies. A duo of the most innovative formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can beat the market by a solid margin (see the details here).

[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/caption]

Paul Marshall Marshall Wace

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to go over the recent hedge fund action encompassing North American Construction Group Ltd. (NYSE:NOA).

How have hedgies been trading North American Construction Group Ltd. (NYSE:NOA)?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in NOA a year ago. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Among these funds, Cannell Capital held the most valuable stake in North American Construction Group Ltd. (NYSE:NOA), which was worth $27.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $12 million worth of shares. Arrowstreet Capital, Springbok Capital, and Marshall Wace were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cannell Capital allocated the biggest weight to North American Construction Group Ltd. (NYSE:NOA), around 8.86% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, designating 0.26 percent of its 13F equity portfolio to NOA.

Now, specific money managers were breaking ground themselves. Navellier & Associates, managed by Louis Navellier, established the most outsized position in North American Construction Group Ltd. (NYSE:NOA). Navellier & Associates had $0.5 million invested in the company at the end of the quarter.

Let's check out hedge fund activity in other stocks similar to North American Construction Group Ltd. (NYSE:NOA). These stocks are Akazoo S.A. (NASDAQ:SONG), Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), Prothena Corporation plc (NASDAQ:PRTA), and Golden Star Resources Ltd. (NYSE:GSS). This group of stocks' market caps are closest to NOA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SONG,4,5292,-2 RIGL,16,59317,2 PRTA,17,156799,-1 GSS,3,6932,-3 Average,10,57085,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $47 million in NOA's case. Prothena Corporation plc (NASDAQ:PRTA) is the most popular stock in this table. On the other hand Golden Star Resources Ltd. (NYSE:GSS) is the least popular one with only 3 bullish hedge fund positions. North American Construction Group Ltd. (NYSE:NOA) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NOA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NOA investors were disappointed as the stock returned -4.8% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.

Disclosure: None. This article was originally published at Insider Monkey.

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