In this article we will check out the progression of hedge fund sentiment towards National Presto Industries Inc. (NYSE:NPK) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is National Presto Industries Inc. (NYSE:NPK) a superb investment today? Hedge funds are turning less bullish. The number of long hedge fund bets shrunk by 5 in recent months. Our calculations also showed that NPK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are viewed as unimportant, old investment tools of the past. While there are over 8000 funds trading at the moment, We look at the elite of this club, about 850 funds. These hedge fund managers shepherd bulk of the hedge fund industry's total asset base, and by tracking their unrivaled stock picks, Insider Monkey has identified many investment strategies that have historically surpassed Mr. Market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_844243" align="aligncenter" width="400"] Donald Sussman of Paloma 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 check out the key hedge fund action surrounding National Presto Industries Inc. (NYSE:NPK).
How are hedge funds trading National Presto Industries Inc. (NYSE:NPK)?
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -45% from the fourth quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in NPK a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in National Presto Industries Inc. (NYSE:NPK) was held by Royce & Associates, which reported holding $31.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $12.4 million position. Other investors bullish on the company included Winton Capital Management, Citadel Investment Group, and D E Shaw. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to National Presto Industries Inc. (NYSE:NPK), around 0.43% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.12 percent of its 13F equity portfolio to NPK.
Since National Presto Industries Inc. (NYSE:NPK) has witnessed bearish sentiment from the smart money, it's easy to see that there exists a select few money managers that elected to cut their full holdings by the end of the first quarter. At the top of the heap, Cliff Asness's AQR Capital Management sold off the biggest investment of the "upper crust" of funds watched by Insider Monkey, valued at about $0.7 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dropped about $0.6 million worth. These transactions are interesting, as total hedge fund interest was cut by 5 funds by the end of the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to National Presto Industries Inc. (NYSE:NPK). We will take a look at Kelly Services, Inc. (NASDAQ:KELYA), Thermon Group Holdings, Inc. (NYSE:THR), Atara Biotherapeutics Inc (NASDAQ:ATRA), and MeiraGTx Holdings plc (NASDAQ:MGTX). This group of stocks' market values are closest to NPK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KELYA,13,13558,1 THR,11,24611,-3 ATRA,17,220066,1 MGTX,17,170760,-4 Average,14.5,107249,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $52 million in NPK's case. Atara Biotherapeutics Inc (NASDAQ:ATRA) is the most popular stock in this table. On the other hand Thermon Group Holdings, Inc. (NYSE:THR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks National Presto Industries Inc. (NYSE:NPK) is even less popular than THR. Hedge funds clearly dropped the ball on NPK as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on NPK as the stock returned 28.9% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.