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Are National Beverage Corp. (FIZZ) Shares About to Fizz Out?

It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong some times, as in the case of some of their top picks from the index like Micron and Anadarko. The data though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.

National Beverage Corp. (NASDAQ:FIZZ) shares gained over 35% during the third quarter and have now more than doubled in value since the end of May. However, despite its rise, the stock hasn’t done much to attract the interest of the smart money followed by Insider Monkey. Overall, hedge fund sentiment was unchanged during the third quarter. The stock was in 8 hedge funds’ portfolios at the end of the quarter, with those investors holding a mere 1.70% of the company’s shares. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as MGE Energy, Inc. (NASDAQ:MGEE), Simmons First National Corporation (NASDAQ:SFNC), and Select Medical Holdings Corporation (NYSE:SEM) to gather more data points.

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In the 21st century investor’s toolkit there are dozens of indicators shareholders employ to analyze publicly traded companies. Some of the best indicators are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outpace their index-focused peers by a solid margin (see the details here).

Now, let’s analyze the fresh action regarding National Beverage Corp. (NASDAQ:FIZZ).

What does the smart money think about National Beverage Corp. (NASDAQ:FIZZ)?

Heading into Q4, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in National Beverage Corp. (NASDAQ:FIZZ), worth close to $20.3 million, corresponding to less than 0.1% of its total 13F portfolio. On Renaissance Technologies’ heels is Israel Englander’s Millennium Management, with a $1.6 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism encompass Peter Muller’s PDT Partners, Roger Ibbotson’s Zebra Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Due to the fact that National Beverage Corp. (NASDAQ:FIZZ) has witnessed a declination in interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that elected to cut their entire stakes last quarter. At the top of the heap, Joel Greenblatt’s Gotham Asset Management said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, comprising about $1.1 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as National Beverage Corp. (NASDAQ:FIZZ) but similarly valued. These stocks are MGE Energy, Inc. (NASDAQ:MGEE), Simmons First National Corporation (NASDAQ:SFNC), Select Medical Holdings Corporation (NYSE:SEM), and Prothena Corporation PLC (NASDAQ:PRTA). This group of stocks’ market values match FIZZ’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MGEE 7 17567 1
SFNC 5 10682 -3
SEM 23 336828 1
PRTA 19 440415 3

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was just $25 million in FIZZ’s case. Select Medical Holdings Corporation (NYSE:SEM) is the most popular stock in this table. On the other hand Simmons First National Corporation (NASDAQ:SFNC) is the least popular one with only 5 bullish hedge fund positions. National Beverage Corp. (NASDAQ:FIZZ) is not the least popular stock in this group but hedge fund interest is still below average and hedge funds are underweight the stock. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SEM might be a better candidate to consider a long position in.

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