"The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak," are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Northrim BanCorp, Inc. (NASDAQ:NRIM) and see how it was affected.
Northrim BanCorp, Inc. (NASDAQ:NRIM) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Our calculations also showed that NRIM 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.
According to most investors, hedge funds are perceived as slow, outdated investment vehicles of the past. While there are more than 8000 funds trading at present, We choose to focus on the crème de la crème of this group, around 750 funds. These investment experts handle the lion's share of the hedge fund industry's total asset base, and by monitoring their top stock picks, Insider Monkey has spotted several investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
[caption id="attachment_673876" align="aligncenter" width="473"] John Overdeck of Two Sigma Advisors[/caption]
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let's go over the latest hedge fund action encompassing Northrim BanCorp, Inc. (NASDAQ:NRIM).
How are hedge funds trading Northrim BanCorp, Inc. (NASDAQ:NRIM)?
At the end of the second quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NRIM over the last 16 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Northrim BanCorp, Inc. (NASDAQ:NRIM) was held by Royce & Associates, which reported holding $13 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $6.6 million position. Other investors bullish on the company included Private Capital Management, Arrowstreet Capital, and Two Sigma Advisors.
As industrywide interest jumped, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the biggest position in Northrim BanCorp, Inc. (NASDAQ:NRIM). Arrowstreet Capital had $0.7 million invested in the company at the end of the quarter.
Let's check out hedge fund activity in other stocks similar to Northrim BanCorp, Inc. (NASDAQ:NRIM). These stocks are Hurco Companies, Inc. (NASDAQ:HURC), Minerva Neurosciences, Inc (NASDAQ:NERV), RGC Resources, Inc. (NASDAQ:RGCO), and Covia Holdings Corporation (NYSE:CVIA). This group of stocks' market valuations resemble NRIM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HURC,7,41553,0 NERV,9,24731,-2 RGCO,1,787,0 CVIA,7,19101,2 Average,6,21543,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $25 million in NRIM's case. Minerva Neurosciences, Inc (NASDAQ:NERV) is the most popular stock in this table. On the other hand RGC Resources, Inc. (NASDAQ:RGCO) is the least popular one with only 1 bullish hedge fund positions. Northrim BanCorp, Inc. (NASDAQ:NRIM) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on NRIM as the stock returned 12.3% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.