U.S. Markets close in 5 hrs 16 mins

Is National CineMedia, Inc. (NCMI) A Good Stock To Buy?

Abigail Fisher

We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of National CineMedia, Inc. (NASDAQ:NCMI).

National CineMedia, Inc. (NASDAQ:NCMI) has seen a decrease in activity from the world's largest hedge funds recently. NCMI was in 18 hedge funds' portfolios at the end of the first quarter of 2019. There were 19 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.

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.

John Overdeck of Two Sigma

We're going to take a peek at the latest hedge fund action regarding National CineMedia, Inc. (NASDAQ:NCMI).

How are hedge funds trading National CineMedia, Inc. (NASDAQ:NCMI)?

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the fourth quarter of 2018. On the other hand, there were a total of 17 hedge funds with a bullish position in NCMI 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.

NCMI_june2019

Among these funds, Greenhouse Funds held the most valuable stake in National CineMedia, Inc. (NASDAQ:NCMI), which was worth $17 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $7.5 million worth of shares. Moreover, Arrowstreet Capital, Citadel Investment Group, and Two Sigma Advisors were also bullish on National CineMedia, Inc. (NASDAQ:NCMI), allocating a large percentage of their portfolios to this stock.

Because National CineMedia, Inc. (NASDAQ:NCMI) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedgies that elected to cut their full holdings last quarter. At the top of the heap, Peter Algert and Kevin Coldiron's Algert Coldiron Investors said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, valued at about $0.5 million in stock. Michael Platt and William Reeves's fund, BlueCrest Capital Mgmt., also dropped its stock, about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds last quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as National CineMedia, Inc. (NASDAQ:NCMI) but similarly valued. We will take a look at Hemisphere Media Group Inc (NASDAQ:HMTV), Arcus Biosciences, Inc. (NYSE:RCUS), ObsEva SA (NASDAQ:OBSV), and First Mid Bancshares, Inc. (NASDAQ:FMBH). All of these stocks' market caps resemble NCMI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HMTV,8,46712,2 RCUS,8,72854,-1 OBSV,11,76483,0 FMBH,3,8537,-1 Average,7.5,51147,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $34 million in NCMI's case. ObsEva SA (NASDAQ:OBSV) is the most popular stock in this table. On the other hand First Mid Bancshares, Inc. (NASDAQ:FMBH) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks National CineMedia, Inc. (NASDAQ:NCMI) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately NCMI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NCMI were disappointed as the stock returned -3.5% during the same 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 in Q2.

Disclosure: None. This article was originally published at Insider Monkey.

Related Content