Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Northern Technologies International Corp (NASDAQ:NTIC).
Hedge fund interest in Northern Technologies International Corp (NASDAQ:NTIC) 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 NTIC to other stocks including T2 Biosystems Inc (NASDAQ:TTOO), U.S. Auto Parts Network, Inc. (NASDAQ:PRTS), and Vaccinex, Inc. (NASDAQ:VCNX) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are assumed to be underperforming, outdated investment tools of years past. While there are more than 8000 funds with their doors open at present, Our researchers choose to focus on the leaders of this club, around 850 funds. These money managers oversee bulk of the hedge fund industry's total asset base, and by tailing their top investments, Insider Monkey has figured out various investment strategies that have historically outperformed Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_338410" align="aligncenter" width="400"] Jeffrey Bronchick of Cove Street Capital[/caption]
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 stocks recommended/scorned by legendary Bill Miller. 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. Now we're going to analyze the latest hedge fund action regarding Northern Technologies International Corp (NASDAQ:NTIC).
Hedge fund activity in Northern Technologies International Corp (NASDAQ:NTIC)
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in NTIC a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Rutabaga Capital Management, managed by Peter Schliemann, holds the biggest position in Northern Technologies International Corp (NASDAQ:NTIC). Rutabaga Capital Management has a $2.5 million position in the stock, comprising 1.5% of its 13F portfolio. Coming in second is Cove Street Capital, managed by Jeffrey Bronchick, which holds a $1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise Renaissance Technologies, Gavin Saitowitz and Cisco J. del Valle's Springbok Capital and . In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Northern Technologies International Corp (NASDAQ:NTIC), around 1.51% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, earmarking 0.21 percent of its 13F equity portfolio to NTIC.
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 third 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 go over hedge fund activity in other stocks - not necessarily in the same industry as Northern Technologies International Corp (NASDAQ:NTIC) but similarly valued. We will take a look at T2 Biosystems Inc (NASDAQ:TTOO), U.S. Auto Parts Network, Inc. (NASDAQ:PRTS), Vaccinex, Inc. (NASDAQ:VCNX), and Marchex, Inc. (NASDAQ:MCHX). All of these stocks' market caps are similar to NTIC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TTOO,2,238,-2 PRTS,5,6170,3 VCNX,2,4825,0 MCHX,12,11894,-5 Average,5.25,5782,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $4 million in NTIC's case. Marchex, Inc. (NASDAQ:MCHX) is the most popular stock in this table. On the other hand T2 Biosystems Inc (NASDAQ:TTOO) is the least popular one with only 2 bullish hedge fund positions. Northern Technologies International Corp (NASDAQ:NTIC) 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 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately NTIC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); NTIC investors were disappointed as the stock returned -0.1% during the second quarter 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.