The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded National General Holdings Corp (NASDAQ:NGHC) based on those filings.
Is National General Holdings Corp (NASDAQ:NGHC) an attractive stock to buy now? Money managers are getting more bullish. The number of long hedge fund bets rose by 2 lately. Our calculations also showed that NGHC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). NGHC was in 18 hedge funds’ portfolios at the end of the first quarter of 2020. There were 16 hedge funds in our database with NGHC positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the latest hedge fund action surrounding National General Holdings Corp (NASDAQ:NGHC).
What does smart money think about National General Holdings Corp (NASDAQ:NGHC)?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the fourth quarter of 2019. On the other hand, there were a total of 18 hedge funds with a bullish position in NGHC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in National General Holdings Corp (NASDAQ:NGHC) was held by Park West Asset Management, which reported holding $95.4 million worth of stock at the end of September. It was followed by MSDC Management with a $35.8 million position. Other investors bullish on the company included Nut Tree Capital, AQR Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Nut Tree Capital allocated the biggest weight to National General Holdings Corp (NASDAQ:NGHC), around 13.74% of its 13F portfolio. MSDC Management is also relatively very bullish on the stock, designating 9.68 percent of its 13F equity portfolio to NGHC.
Now, key hedge funds have been driving this bullishness. Engineers Gate Manager, managed by Greg Eisner, initiated the largest position in National General Holdings Corp (NASDAQ:NGHC). Engineers Gate Manager had $0.8 million invested in the company at the end of the quarter. Ravee Mehta’s Nishkama Capital also initiated a $0.7 million position during the quarter. The only other fund with a new position in the stock is Mike Vranos’s Ellington.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as National General Holdings Corp (NASDAQ:NGHC) but similarly valued. These stocks are Northwest Natural Holding Company (NYSE:NWN), ASGN Incorporated (NYSE:ASGN), Evercore Inc. (NYSE:EVR), and Triton International Limited (NYSE:TRTN). This group of stocks’ market valuations are closest to NGHC’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $186 million in NGHC’s case. Evercore Inc. (NYSE:EVR) is the most popular stock in this table. On the other hand Triton International Limited (NYSE:TRTN) is the least popular one with only 12 bullish hedge fund positions. National General Holdings Corp (NASDAQ:NGHC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on NGHC as the stock returned 27.9% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.