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Is Northfield Bancorp Inc (NASDAQ:NFBK) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Northfield Bancorp Inc (NASDAQ:NFBK) undervalued? Prominent investors are buying. The number of bullish hedge fund bets inched up by 1 in recent months. Our calculations also showed that NFBK isn't among the 30 most popular stocks among hedge funds. NFBK was in 4 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 3 hedge funds in our database with NFBK positions at the end of the previous quarter.
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 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a gander at the new hedge fund action regarding Northfield Bancorp Inc (NASDAQ:NFBK).
How are hedge funds trading Northfield Bancorp Inc (NASDAQ:NFBK)?
At Q4's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in NFBK 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.
Of the funds tracked by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the number one position in Northfield Bancorp Inc (NASDAQ:NFBK). Renaissance Technologies has a $28.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies's heels is Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism include D. E. Shaw's D E Shaw, and Cliff Asness's AQR Capital Management.
Now, specific money managers were leading the bulls' herd. D E Shaw, managed by D. E. Shaw, initiated the largest position in Northfield Bancorp Inc (NASDAQ:NFBK). D E Shaw had $0.3 million invested in the company at the end of the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Northfield Bancorp Inc (NASDAQ:NFBK) but similarly valued. We will take a look at Franklin Street Properties Corp. (NYSEAMEX:FSP), Carolina Financial Corporation (NASDAQ:CARO), Enova International Inc (NYSE:ENVA), and Par Pacific Holdings, Inc. (NYSEMKT:PARR). This group of stocks' market values are closest to NFBK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSP,15,28612,8 CARO,8,41686,2 ENVA,23,147435,2 PARR,16,93727,-1 Average,15.5,77865,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $29 million in NFBK's case. Enova International Inc (NYSE:ENVA) is the most popular stock in this table. On the other hand Carolina Financial Corporation (NASDAQ:CARO) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Northfield Bancorp Inc (NASDAQ:NFBK) is even less popular than CARO. Hedge funds dodged a bullet by taking a bearish stance towards NFBK. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately NFBK wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); NFBK investors were disappointed as the stock returned 5.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
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