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How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB).
Is OMAB a good stock to buy now? The best stock pickers were turning bullish. The number of bullish hedge fund bets inched up by 3 recently. Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB) was in 7 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that OMAB 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). There were 4 hedge funds in our database with OMAB holdings at the end of June.
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
Richard Driehaus of Driehaus Capital
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. With all of this in mind let's view the latest hedge fund action regarding Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB).
What does smart money think about Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB)?
At the end of September, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 75% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards OMAB over the last 21 quarters. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB) was held by Renaissance Technologies, which reported holding $22.3 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $1.9 million position. Other investors bullish on the company included Millennium Management, Prelude Capital (previously Springbok Capital), and Driehaus Capital. In terms of the portfolio weights assigned to each position Prelude Capital (previously Springbok Capital) allocated the biggest weight to Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB), around 0.06% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to OMAB.
As industrywide interest jumped, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, created the most outsized position in Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB). Millennium Management had $1.7 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital) also initiated a $1.2 million position during the quarter. The other funds with brand new OMAB positions are Richard Driehaus's Driehaus Capital and Ken Griffin's Citadel Investment Group.
Let's now review hedge fund activity in other stocks similar to Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB). These stocks are Cerence Inc. (NASDAQ:CRNC), Assured Guaranty Ltd. (NYSE:AGO), AtriCure Inc. (NASDAQ:ATRC), The Goodyear Tire & Rubber Company (NASDAQ:GT), Rush Enterprises, Inc. (NASDAQ:RUSHB), Easterly Government Properties Inc (NYSE:DEA), and Hilton Grand Vacations Inc. (NYSE:HGV). This group of stocks' market caps resemble OMAB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRNC,12,135180,-2 AGO,27,205479,2 ATRC,21,224194,-2 GT,24,166177,3 RUSHB,2,37287,-2 DEA,13,127817,-2 HGV,32,575867,2 Average,18.7,210286,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $29 million in OMAB's case. Hilton Grand Vacations Inc. (NYSE:HGV) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 2 bullish hedge fund positions. Grupo Aeroportuario del Centro Nort (NASDAQ:OMAB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OMAB is 46.3. 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 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on OMAB as the stock returned 44.2% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.