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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the fourth quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Newmark Group, Inc. (NASDAQ:NMRK) based on that data.
Is NMRK a good stock to buy? Newmark Group, Inc. (NASDAQ:NMRK) shareholders have witnessed a decrease in support from the world's most elite money managers lately. Newmark Group, Inc. (NASDAQ:NMRK) was in 21 hedge funds' portfolios at the end of March. The all time high for this statistic is 24. There were 22 hedge funds in our database with NMRK holdings at the end of December. Our calculations also showed that NMRK isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Do Hedge Funds Think NMRK Is A Good Stock To Buy Now?
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in NMRK a year ago. So, let's review 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, Cardinal Capital, managed by Amy Minella, holds the number one position in Newmark Group, Inc. (NASDAQ:NMRK). Cardinal Capital has a $59.9 million position in the stock, comprising 1.5% of its 13F portfolio. The second most bullish fund manager is Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, which holds a $47.7 million position; 1.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish comprise John Paulson's Paulson & Co, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Daniel Beltzman and Gergory Smith's Birch Run Capital. In terms of the portfolio weights assigned to each position Birch Run Capital allocated the biggest weight to Newmark Group, Inc. (NASDAQ:NMRK), around 6.92% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, dishing out 1.47 percent of its 13F equity portfolio to NMRK.
Seeing as Newmark Group, Inc. (NASDAQ:NMRK) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there is a sect of money managers that decided to sell off their positions entirely last quarter. Intriguingly, Steve Pei's Gratia Capital sold off the largest stake of the "upper crust" of funds monitored by Insider Monkey, worth an estimated $2.3 million in stock, and David Harding's Winton Capital Management was right behind this move, as the fund dumped about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Newmark Group, Inc. (NASDAQ:NMRK). These stocks are Northwest Bancshares, Inc. (NASDAQ:NWBI), CorVel Corporation (NASDAQ:CRVL), Covanta Holding Corporation (NYSE:CVA), Cogentix Medical Inc (NASDAQ:CGNT), Plains GP Holdings LP (NYSE:PAGP), Hyliion Holdings Corp. (NYSE:HYLN), and Grupo Simec S.A.B. de C.V. (NYSE:SIM). All of these stocks' market caps resemble NMRK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NWBI,14,32740,5 CRVL,10,115115,-3 CVA,21,180517,0 CGNT,12,233892,12 PAGP,15,72231,-3 HYLN,12,26624,0 SIM,1,2970,0 Average,12.1,94870,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $194 million in NMRK's case. Covanta Holding Corporation (NYSE:CVA) is the most popular stock in this table. On the other hand Grupo Simec S.A.B. de C.V. (NYSE:SIM) is the least popular one with only 1 bullish hedge fund positions. Newmark Group, Inc. (NASDAQ:NMRK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NMRK is 80.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on NMRK, though not to the same extent, as the stock returned 14% since Q1 (through July 16th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.