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In this article we will take a look at whether hedge funds think Northfield Bancorp Inc (NASDAQ:NFBK) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is NFBK a good stock to buy? Prominent investors were selling. The number of long hedge fund positions shrunk by 3 recently. Northfield Bancorp Inc (NASDAQ:NFBK) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 9. Our calculations also showed that NFBK 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.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to view the key hedge fund action encompassing Northfield Bancorp Inc (NASDAQ:NFBK).
Do Hedge Funds Think NFBK Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in NFBK a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the biggest position in Northfield Bancorp Inc (NASDAQ:NFBK), worth close to $28.7 million, corresponding to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies's heels is AQR Capital Management, led by Cliff Asness, holding a $3.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish comprise D. E. Shaw's D E Shaw, Ken Griffin's Citadel Investment Group and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Northfield Bancorp Inc (NASDAQ:NFBK), around 0.04% of its 13F portfolio. AQR Capital Management is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to NFBK.
Since Northfield Bancorp Inc (NASDAQ:NFBK) has witnessed a decline in interest from hedge fund managers, we can see that there is a sect of hedgies that decided to sell off their entire stakes in the first quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP dropped the biggest stake of all the hedgies monitored by Insider Monkey, totaling close to $1 million in stock. Michael Gelband's fund, ExodusPoint Capital, also sold off its stock, about $0.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 3 funds in the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Northfield Bancorp Inc (NASDAQ:NFBK) but similarly valued. We will take a look at Collegium Pharmaceutical Inc (NASDAQ:COLL), Vanda Pharmaceuticals Inc. (NASDAQ:VNDA), Adaptimmune Therapeutics plc (NASDAQ:ADAP), Tucows Inc. (NYSE:TCX), Byline Bancorp, Inc. (NYSE:BY), Avidity Biosciences, Inc. (NASDAQ:RNA), and OptimizeRx Corporation (NASDAQ:OPRX). All of these stocks' market caps are closest to NFBK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COLL,15,211903,-5 VNDA,18,207370,-2 ADAP,15,343461,-2 TCX,7,84763,0 BY,8,28220,1 RNA,15,219671,-2 OPRX,11,48205,3 Average,12.7,163370,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $37 million in NFBK's case. Vanda Pharmaceuticals Inc. (NASDAQ:VNDA) is the most popular stock in this table. On the other hand Tucows Inc. (NYSE:TCX) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Northfield Bancorp Inc (NASDAQ:NFBK) is even less popular than TCX. Our overall hedge fund sentiment score for NFBK is 22. 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. Hedge funds dodged a bullet by taking a bearish stance towards NFBK. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market again by 4.8 percentage points. Unfortunately NFBK wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); NFBK investors were disappointed as the stock returned 5.7% since the end of the first quarter (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.