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Hedge Funds Have Never Been This Bullish On North American Construction Group (NOA)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about North American Construction Group Ltd. (NYSE:NOA) in this article.

North American Construction Group Ltd. (NYSE:NOA) has experienced an increase in hedge fund sentiment recently. Our calculations also showed that NOA isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Carlo Cannell

In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources  like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let’s take a look at the recent hedge fund action encompassing North American Construction Group Ltd. (NYSE:NOA).

Hedge fund activity in North American Construction Group Ltd. (NYSE:NOA)

At Q2’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NOA over the last 16 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

NOA_nov2019

According to Insider Monkey’s hedge fund database, Cannell Capital, managed by J. Carlo Cannell, holds the number one position in North American Construction Group Ltd. (NYSE:NOA). Cannell Capital has a $28.4 million position in the stock, comprising 8.1% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies holding a $11.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital and Paul Marshall and Ian Wace’s Marshall Wace LLP.

As one would reasonably expect, some big names have jumped into North American Construction Group Ltd. (NYSE:NOA) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in North American Construction Group Ltd. (NYSE:NOA). Marshall Wace LLP had $1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.6 million position during the quarter.

Let’s also examine hedge fund activity in other stocks similar to North American Construction Group Ltd. (NYSE:NOA). These stocks are American Midstream Partners LP (NYSE:AMID), Ardmore Shipping Corp (NYSE:ASC), DASAN Zhone Solutions, Inc. (NASDAQ:DZSI), and Gladstone Capital Corporation (NASDAQ:GLAD). This group of stocks’ market values resemble NOA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMID 7 32088 -1
ASC 10 27291 1
DZSI 6 7836 4
GLAD 5 5438 0
Average 7 18163 1

View table here if you experience formatting issues.

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 $18 million. That figure was $47 million in NOA’s case. Ardmore Shipping Corp (NYSE:ASC) is the most popular stock in this table. On the other hand Gladstone Capital Corporation (NASDAQ:GLAD) is the least popular one with only 5 bullish hedge fund positions. North American Construction Group Ltd. (NYSE:NOA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on NOA as the stock returned 7.2% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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