Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Navigator Holdings Ltd (NYSE:NVGS) was in 9 hedge funds’ portfolios at the end of the third quarter of 2016. NVGS investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 16 hedge funds in our database with NVGS holdings at the end of the previous quarter. At the end of this article we will also compare NVGS to other stocks including First Foundation Inc (NASDAQ:FFWM), Resource Capital Corp. (NYSE:RSO), and BP Prudhoe Bay Royalty Trust (NYSE:BPT) 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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What does the smart money think about Navigator Holdings Ltd (NYSE:NVGS)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 44% from the second quarter of 2016. On the other hand, there were a total of 11 hedge funds with a bullish position in NVGS at the beginning of this year. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Wilbur Ross Invesco Private Capital (WL Ross) holds the largest position in Navigator Holdings Ltd (NYSE:NVGS). Invesco Private Capital (WL Ross) has a $157.2 million position in the stock, comprising 41.1% of its 13F portfolio. Coming in second is Murray Stahl of Horizon Asset Management which holds a $10 million position. Some other peers that hold long positions comprise Charles Frumberg’s Emancipation Capital, Robert Emil Zoellner’s Alpine Associates and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are 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.
Judging by the fact that Navigator Holdings Ltd (NYSE:NVGS) has sustained falling interest from hedge fund managers, we can see that there were a few money managers who were dropping their positions entirely in the third quarter. Intriguingly, Clint Carlson’s Carlson Capital sold off the biggest investment of all the investors tracked by Insider Monkey, worth close to $6.8 million in stock. Chuck Royce’s fund, Royce & Associates, also said goodbye to its stock, about $4 million worth.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Navigator Holdings Ltd (NYSE:NVGS) but similarly valued. These stocks are First Foundation Inc (NASDAQ:FFWM), Resource Capital Corp. (NYSE:RSO), BP Prudhoe Bay Royalty Trust (NYSE:BPT), and National Research Corp (NASDAQ:NRCIA). This group of stocks’ market values are closest to NVGS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FFWM | 7 | 40805 | -4 |
| RSO | 2 | 944 | 0 |
| BPT | 2 | 484 | 0 |
| NRCIA | 3 | 16429 | -1 |
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $182 million in NVGS’s case. First Foundation Inc (NASDAQ:FFWM) is the most popular stock in this table. On the other hand Resource Capital Corp. (NYSE:RSO) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Navigator Holdings Ltd (NYSE:NVGS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
