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 at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article we look at what those investors think of Nicholas Financial, Inc. (NASDAQ:NICK).
Hedge fund interest in Nicholas Financial, Inc. (NASDAQ:NICK) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as IEC Electronics Corp. (NYSE:IEC), Strata Skin Sciences, Inc. (NASDAQ:SSKN), and Ampio Pharmaceuticals, Inc. (NYSE:AMPE) to gather more data points. Our calculations also showed that NICK isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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' 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the key hedge fund action surrounding Nicholas Financial, Inc. (NASDAQ:NICK).
What does smart money think about Nicholas Financial, Inc. (NASDAQ:NICK)?
Heading into the fourth quarter of 2019, a total of 2 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NICK over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Magnolia Capital Fund was the largest shareholder of Nicholas Financial, Inc. (NASDAQ:NICK), with a stake worth $17.3 million reported as of the end of September. Trailing Magnolia Capital Fund was Renaissance Technologies, which amassed a stake valued at $4.8 million.
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 also examine hedge fund activity in other stocks similar to Nicholas Financial, Inc. (NASDAQ:NICK). These stocks are IEC Electronics Corp. (NYSE:IEC), Strata Skin Sciences, Inc. (NASDAQ:SSKN), Ampio Pharmaceuticals, Inc. (NYSE:AMPE), and CARBO Ceramics Inc. (NYSE:CRR). This group of stocks' market valuations are similar to NICK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IEC,3,6238,1 SSKN,4,15524,1 AMPE,4,210,-1 CRR,6,9284,-2 Average,4.25,7814,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $22 million in NICK's case. CARBO Ceramics Inc. (NYSE:CRR) is the most popular stock in this table. On the other hand IEC Electronics Corp. (NYSE:IEC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Nicholas Financial, Inc. (NASDAQ:NICK) is even less popular than IEC. Hedge funds dodged a bullet by taking a bearish stance towards NICK. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately NICK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NICK investors were disappointed as the stock returned 1.6% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.