Is Northern Technologies International Corp (NTIC) A Good Stock To Buy?

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Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks similar to Northern Technologies International Corp (NASDAQ:NTIC). We will take a look at Inuvo, Inc. (NYSEMKT:INUV), TransAct Technologies Incorporated (NASDAQ:TACT), Arch Coal Inc (NYSE:ACI), and Timmins Gold Corp (NYSEMKT:TGD). All of these stocks’ market caps match NTIC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INUV 4 4614 -1
TACT 5 4803 2
ACI 9 8019 -6
TGD 5 2605 -1

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $7 million in NTIC’s case. Arch Coal Inc (NYSE:ACI) is the most popular stock in this table. On the other hand Inuvo, Inc. (NYSEMKT:INUV) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Northern Technologies International Corp (NASDAQ:NTIC) is even less popular than INUV. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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