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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Noodles & Co (NASDAQ:NDLS) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Noodles & Co (NASDAQ:NDLS) has experienced an increase in enthusiasm from smart money of late. Noodles & Co (NASDAQ:NDLS) was in 19 hedge funds' portfolios at the end of September. The all time high for this statistic is 20. Our calculations also showed that NDLS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to analyze the recent hedge fund action surrounding Noodles & Co (NASDAQ:NDLS).
Do Hedge Funds Think NDLS Is A Good Stock To Buy Now?
At the end of September, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in NDLS a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Woodson Capital Management held the most valuable stake in Noodles & Co (NASDAQ:NDLS), which was worth $26.3 million at the end of the third quarter. On the second spot was Rip Road Capital which amassed $11.7 million worth of shares. Royce & Associates, Prospector Partners, and Plaisance Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Plaisance Capital allocated the biggest weight to Noodles & Co (NASDAQ:NDLS), around 6.92% of its 13F portfolio. Rip Road Capital is also relatively very bullish on the stock, earmarking 3.96 percent of its 13F equity portfolio to NDLS.
As one would reasonably expect, specific money managers have jumped into Noodles & Co (NASDAQ:NDLS) headfirst. Millennium Management, managed by Israel Englander, assembled the largest position in Noodles & Co (NASDAQ:NDLS). Millennium Management had $0.7 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Noodles & Co (NASDAQ:NDLS) but similarly valued. We will take a look at Oxford Immunotec Global PLC (NASDAQ:OXFD), GTT Communications Inc (NYSE:GTT), Innate Pharma S.A. (NASDAQ:IPHA), Griffin Industrial Realty, Inc. (NASDAQ:GRIF), Gilat Satellite Networks Ltd. (NASDAQ:GILT), Gladstone Investment Corporation (NASDAQ:GAIN), and Village Farms International, Inc. (NASDAQ:VFF). This group of stocks' market valuations match NDLS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OXFD,20,136176,2 GTT,9,87069,0 IPHA,2,1248,-1 GRIF,4,38978,0 GILT,7,29466,-1 GAIN,3,1980,-2 VFF,7,7152,5 Average,7.4,43153,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.4 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $67 million in NDLS's case. Oxford Immunotec Global PLC (NASDAQ:OXFD) is the most popular stock in this table. On the other hand Innate Pharma S.A. (NASDAQ:IPHA) is the least popular one with only 2 bullish hedge fund positions. Noodles & Co (NASDAQ:NDLS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NDLS is 81.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on NDLS as the stock returned 19.5% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.