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Hedge Funds Are Betting On Neenah Paper, Inc. (NP)

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Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Is Neenah Paper, Inc. (NYSE:NP) a buy here? Prominent investors are really turning bullish. The number of long hedge fund investments improved by 3 in recent months. There were 10 hedge funds in our database with NP positions at the end of the 2016 third quarter. At the end of this article we will also compare NP to other stocks including Universal Corp (NYSE:UVV), Exponent, Inc. (NASDAQ:EXPO), and Wesco Aircraft Holdings Inc (NYSE:WAIR) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Keeping this in mind, let’s take a glance at the latest action encompassing Neenah Paper, Inc. (NYSE:NP).

What have hedge funds been doing with Neenah Paper, Inc. (NYSE:NP)?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a boost of 43% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in NP heading into this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

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According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the largest position in Neenah Paper, Inc. (NYSE:NP), worth close to $85.5 million, amounting to 0.6% of its total 13F portfolio. The second largest stake is held by Cliff Asness AQR Capital Management, which oversees a $2.8 million position. Other professional money managers that hold long positions encompass J. Alan Reid, Jr.’s Forward Management, Roger Ibbotson’s Zebra Capital Management and D E Shaw which is one of the biggest hedge funds in the world. We should note that Forward Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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