Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about National Presto Industries Inc. (NYSE:NPK) in this article.
Hedge fund interest in National Presto Industries Inc. (NYSE:NPK) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as UroGen Pharma Ltd. (NASDAQ:URGN), Fidelity Southern Corporation (NASDAQ:LION), and Nanometrics Incorporated (NASDAQ:NANO) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's review the latest hedge fund action surrounding National Presto Industries Inc. (NYSE:NPK).
How are hedge funds trading National Presto Industries Inc. (NYSE:NPK)?
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2018. On the other hand, there were a total of 8 hedge funds with a bullish position in NPK a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in National Presto Industries Inc. (NYSE:NPK) was held by Royce & Associates, which reported holding $64 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $14.9 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and AQR Capital Management.
Due to the fact that National Presto Industries Inc. (NYSE:NPK) has witnessed bearish sentiment from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of hedgies that slashed their positions entirely last quarter. At the top of the heap, Michael Platt and William Reeves's BlueCrest Capital Mgmt. said goodbye to the biggest position of the 700 funds followed by Insider Monkey, totaling close to $0.3 million in stock, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital was right behind this move, as the fund sold off about $0 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as National Presto Industries Inc. (NYSE:NPK) but similarly valued. We will take a look at UroGen Pharma Ltd. (NASDAQ:URGN), Fidelity Southern Corporation (NASDAQ:LION), Nanometrics Incorporated (NASDAQ:NANO), and Global Brass and Copper Holdings Inc (NYSE:BRSS). All of these stocks' market caps are closest to NPK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position URGN,17,171632,5 LION,12,58207,3 NANO,16,101878,-3 BRSS,16,88966,1 Average,15.25,105171,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $92 million in NPK's case. UroGen Pharma Ltd. (NASDAQ:URGN) is the most popular stock in this table. On the other hand Fidelity Southern Corporation (NASDAQ:LION) is the least popular one with only 12 bullish hedge fund positions. National Presto Industries Inc. (NYSE:NPK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately NPK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NPK investors were disappointed as the stock returned -15.5% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.