In this article we will take a look at whether hedge funds think Northrim BanCorp, Inc. (NASDAQ:NRIM) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Northrim BanCorp, Inc. (NASDAQ:NRIM) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare NRIM to other stocks including Accuray Incorporated (NASDAQ:ARAY), InfuSystem Holdings, Inc. (NYSE:INFU), and Norwood Financial Corp. (NASDAQ:NWFL) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_193003" align="aligncenter" width="393"] Chuck Royce of Royce & Associates[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to analyze the recent hedge fund action regarding Northrim BanCorp, Inc. (NASDAQ:NRIM).
What does smart money think about Northrim BanCorp, Inc. (NASDAQ:NRIM)?
At Q1's end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in NRIM a year ago. So, let's examine 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 $9.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $4.4 million position. Other investors bullish on the company included AltraVue Capital, Private Capital Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position AltraVue Capital allocated the biggest weight to Northrim BanCorp, Inc. (NASDAQ:NRIM), around 1.94% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, earmarking 0.62 percent of its 13F equity portfolio to NRIM.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the first quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's check out hedge fund activity in other stocks similar to Northrim BanCorp, Inc. (NASDAQ:NRIM). These stocks are Accuray Incorporated (NASDAQ:ARAY), InfuSystem Holdings, Inc. (NYSE:INFU), Norwood Financial Corp. (NASDAQ:NWFL), and KVH Industries, Inc. (NASDAQ:KVHI). All of these stocks' market caps resemble NRIM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARAY,15,31226,-1 INFU,7,23271,-2 NWFL,2,1990,0 KVHI,6,10489,1 Average,7.5,16744,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $21 million in NRIM's case. Accuray Incorporated (NASDAQ:ARAY) is the most popular stock in this table. On the other hand Norwood Financial Corp. (NASDAQ:NWFL) is the least popular one with only 2 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. 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 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 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately NRIM wasn't nearly as popular as these 10 stocks and hedge funds that were betting on NRIM were disappointed as the stock returned -14.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.