In this article you are going to find out whether hedge funds think National CineMedia, Inc. (NASDAQ:NCMI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
National CineMedia, Inc. (NASDAQ:NCMI) was in 14 hedge funds' portfolios at the end of March. NCMI has seen an increase in activity from the world's largest hedge funds in recent months. There were 13 hedge funds in our database with NCMI positions at the end of the previous quarter. Our calculations also showed that NCMI 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 the average investor there are a large number of gauges stock traders can use to analyze their holdings. Some of the less utilized gauges are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass their index-focused peers by a very impressive margin (see the details here).
[caption id="attachment_25981" align="aligncenter" width="396"] Paul Tudor Jones of Tudor Investment Corp[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. 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. Now we're going to take a peek at the latest hedge fund action regarding National CineMedia, Inc. (NASDAQ:NCMI).
Hedge fund activity in National CineMedia, Inc. (NASDAQ:NCMI)
At Q1's end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in NCMI a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Greenhouse Funds was the largest shareholder of National CineMedia, Inc. (NASDAQ:NCMI), with a stake worth $12.8 million reported as of the end of September. Trailing Greenhouse Funds was Renaissance Technologies, which amassed a stake valued at $5.1 million. Arrowstreet Capital, Citadel Investment Group, and Two Sigma Advisors 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 Greenhouse Funds allocated the biggest weight to National CineMedia, Inc. (NASDAQ:NCMI), around 3.12% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, dishing out 0.06 percent of its 13F equity portfolio to NCMI.
As industrywide interest jumped, some big names were breaking ground themselves. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, initiated the most valuable position in National CineMedia, Inc. (NASDAQ:NCMI). Algert Coldiron Investors had $0.1 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $0.1 million position during the quarter. The other funds with new positions in the stock are Michael Gelband's ExodusPoint Capital and Greg Eisner's Engineers Gate Manager.
Let's now take a look at hedge fund activity in other stocks similar to National CineMedia, Inc. (NASDAQ:NCMI). We will take a look at Ooma Inc (NYSE:OOMA), Kamada Ltd (NASDAQ:KMDA), Park Aerospace Corp. (NYSE:PKE), and TrueCar Inc (NASDAQ:TRUE). This group of stocks' market values resemble NCMI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OOMA,14,69276,1 KMDA,2,6276,-1 PKE,11,52848,-2 TRUE,12,42497,-3 Average,9.75,42724,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $24 million in NCMI's case. Ooma Inc (NYSE:OOMA) is the most popular stock in this table. On the other hand Kamada Ltd (NASDAQ:KMDA) is the least popular one with only 2 bullish hedge fund positions. National CineMedia, Inc. (NASDAQ:NCMI) 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately NCMI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on NCMI were disappointed as the stock returned -5.3% 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.