Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of NV5 Holdings Inc (NASDAQ:NVEE).
NV5 Holdings Inc (NASDAQ:NVEE) investors should pay attention to an increase in enthusiasm from smart money in recent months. Our calculations also showed that NVEE 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the fresh hedge fund action surrounding NV5 Holdings Inc (NASDAQ:NVEE).
How have hedgies been trading NV5 Holdings Inc (NASDAQ:NVEE)?
At Q2's end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NVEE over the last 16 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in NV5 Holdings Inc (NASDAQ:NVEE) was held by Manatuck Hill Partners, which reported holding $10.4 million worth of stock at the end of March. It was followed by Cruiser Capital Advisors with a $6.3 million position. Other investors bullish on the company included Driehaus Capital, Lyon Street Capital, and PEAK6 Capital Management.
As aggregate interest increased, specific money managers were breaking ground themselves. Skylands Capital, managed by Charles Paquelet, established the largest position in NV5 Holdings Inc (NASDAQ:NVEE). Skylands Capital had $1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's check out hedge fund activity in other stocks similar to NV5 Holdings Inc (NASDAQ:NVEE). We will take a look at Turning Point Brands, Inc. (NYSE:TPB), Sandstorm Gold Ltd. (NYSE:SAND), Kadant Inc. (NYSE:KAI), and ANI Pharmaceuticals Inc (NASDAQ:ANIP). This group of stocks' market values resemble NVEE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TPB,14,63437,-2 SAND,15,61450,3 KAI,11,66354,-6 ANIP,12,98908,-5 Average,13,72537,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $30 million in NVEE's case. Sandstorm Gold Ltd. (NYSE:SAND) is the most popular stock in this table. On the other hand Kadant Inc. (NYSE:KAI) is the least popular one with only 11 bullish hedge fund positions. NV5 Holdings Inc (NASDAQ:NVEE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NVEE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NVEE investors were disappointed as the stock returned -16.1% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.