How Newtek Business Services, Corp (NEWT) Stacks Up Against Its Peers

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We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: Mendon Capital Advisors. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Coe Capital Management).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Newtek Business Services, Corp (NASDAQ:NEWT) but similarly valued. We will take a look at West Marine, Inc. (NASDAQ:WMAR), eHealth, Inc. (NASDAQ:EHTH), MBT Financial Corp. (NASDAQ:MBTF), and Home Bancorp, Inc. (NASDAQ:HBCP). This group of stocks’ market valuations are similar to NEWT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WMAR 9 28869 3
EHTH 13 88330 0
MBTF 3 13041 1
HBCP 2 21468 0

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $8 million in NEWT’s case. eHealth, Inc. (NASDAQ:EHTH) is the most popular stock in this table. On the other hand Home Bancorp, Inc. (NASDAQ:HBCP) is the least popular one with only 2 bullish hedge fund positions. Newtek Business Services, Inc (NASDAQ:NEWT) 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. In this regard EHTH might be a better candidate to consider taking a long position in.

Disclosure: None

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