In this article we will check out the progression of hedge fund sentiment towards Newmark Group, Inc. (NASDAQ:NMRK) 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.
Newmark Group, Inc. (NASDAQ:NMRK) was in 24 hedge funds' portfolios at the end of March. NMRK investors should pay attention to an increase in activity from the world's largest hedge funds lately. There were 23 hedge funds in our database with NMRK positions at the end of the previous quarter. Our calculations also showed that NMRK 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
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 trades like this one. 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 let's take a glance at the fresh hedge fund action encompassing Newmark Group, Inc. (NASDAQ:NMRK).
Hedge fund activity in Newmark Group, Inc. (NASDAQ:NMRK)
At Q1's end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards NMRK over the last 18 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Emanuel J. Friedman's EJF Capital has the largest position in Newmark Group, Inc. (NASDAQ:NMRK), worth close to $13.1 million, corresponding to 2.8% of its total 13F portfolio. On EJF Capital's heels is Cardinal Capital, led by Amy Minella, holding a $11.8 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise Michael A. Price and Amos Meron's Empyrean Capital Partners, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and John Paulson's Paulson & Co. In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Newmark Group, Inc. (NASDAQ:NMRK), around 2.77% of its 13F portfolio. Empyrean Capital Partners is also relatively very bullish on the stock, dishing out 0.68 percent of its 13F equity portfolio to NMRK.
Consequently, key hedge funds have been driving this bullishness. Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, established the most outsized position in Newmark Group, Inc. (NASDAQ:NMRK). Empyrean Capital Partners had $9.9 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny's Balyasny Asset Management, Greg Eisner's Engineers Gate Manager, and Cliff Asness's AQR Capital Management.
Let's go over hedge fund activity in other stocks similar to Newmark Group, Inc. (NASDAQ:NMRK). We will take a look at Saul Centers Inc (NYSE:BFS), Raven Industries, Inc. (NASDAQ:RAVN), Teekay LNG Partners L.P. (NYSE:TGP), and Perdoceo Education Corporation (NASDAQ:PRDO). All of these stocks' market caps match NMRK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BFS,7,25019,-1 RAVN,11,73375,-2 TGP,10,38247,-3 PRDO,23,141084,4 Average,12.75,69431,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $67 million in NMRK's case. Perdoceo Education Corporation (NASDAQ:PRDO) is the most popular stock in this table. On the other hand Saul Centers Inc (NYSE:BFS) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Newmark Group, Inc. (NASDAQ:NMRK) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on NMRK as the stock returned 32.3% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.