Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
National Beverage Corp. (NASDAQ:FIZZ) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds' portfolios at the end of September. At the end of this article we will also compare FIZZ to other stocks including Webster Financial Corporation (NYSE:WBS), CAE, Inc. (NYSE:CAE), and athenahealth, Inc (NASDAQ:ATHN) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a look at the latest hedge fund action regarding National Beverage Corp. (NASDAQ:FIZZ).
How are hedge funds trading National Beverage Corp. (NASDAQ:FIZZ)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, no change from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in FIZZ at the beginning of this year. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the biggest position in National Beverage Corp. (NASDAQ:FIZZ). Renaissance Technologies has a $225.5 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Bloom Tree Partners, led by Alok Agrawal, holding a $28.5 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other peers that hold long positions encompass Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Mario Gabelli's GAMCO Investors and James Woodson Davis's Woodson Capital Management.
Seeing as National Beverage Corp. (NASDAQ:FIZZ) has witnessed declining sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of hedge funds who sold off their entire stakes by the end of the third quarter. Interestingly, Joel Ramin's 12 West Capital Management said goodbye to the largest position of the 700 funds tracked by Insider Monkey, valued at an estimated $31.8 million in stock. Louis Navellier's fund, Navellier & Associates, also cut its stock, about $3.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to National Beverage Corp. (NASDAQ:FIZZ). These stocks are Webster Financial Corporation (NYSE:WBS), CAE, Inc. (NYSE:CAE), athenahealth, Inc (NASDAQ:ATHN), and Trinity Industries, Inc. (NYSE:TRN). This group of stocks' market values resemble FIZZ's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WBS,28,379810,11 CAE,10,90452,2 ATHN,27,335405,9 TRN,33,1280684,2 Average,24.5,521588,6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $522 million. That figure was $351 million in FIZZ's case. Trinity Industries, Inc. (NYSE:TRN) is the most popular stock in this table. On the other hand CAE, Inc. (NYSE:CAE) is the least popular one with only 10 bullish hedge fund positions. National Beverage Corp. (NASDAQ:FIZZ) 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. In this regard TRN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.