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Hedge Funds Nibbling On National Beverage Corp. (FIZZ)

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards National Beverage Corp. (NASDAQ:FIZZ) and determine whether hedge funds skillfully traded this stock.

Is National Beverage Corp. (NASDAQ:FIZZ) undervalued? Investors who are in the know were getting more optimistic. The number of long hedge fund bets inched up by 1 lately. National Beverage Corp. (NASDAQ:FIZZ) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistics is 25. Our calculations also showed that FIZZ isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are dozens of formulas stock traders put to use to assess stocks. Some of the most innovative formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top fund managers can trounce the market by a very impressive margin (see the details here).

COATUE MANAGEMENT

Philippe Laffont of Coatue Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind let’s take a gander at the latest hedge fund action encompassing National Beverage Corp. (NASDAQ:FIZZ).

Hedge fund activity in National Beverage Corp. (NASDAQ:FIZZ)

At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the first quarter of 2020. On the other hand, there were a total of 22 hedge funds with a bullish position in FIZZ a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is FIZZ A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the number one position in National Beverage Corp. (NASDAQ:FIZZ). Renaissance Technologies has a $170.3 million position in the stock, comprising 0.1% of its 13F portfolio. On Renaissance Technologies’s heels is Carson Yost of Yost Capital Management, with a $22.2 million position; 18.9% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish contain Mario Gabelli’s GAMCO Investors, Noam Gottesman’s GLG Partners and Thomas E. Claugus’s GMT Capital. In terms of the portfolio weights assigned to each position Yost Capital Management allocated the biggest weight to National Beverage Corp. (NASDAQ:FIZZ), around 18.95% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, earmarking 2.89 percent of its 13F equity portfolio to FIZZ.

As aggregate interest increased, key hedge funds were breaking ground themselves. Manatuck Hill Partners, managed by Mark Broach, initiated the biggest position in National Beverage Corp. (NASDAQ:FIZZ). Manatuck Hill Partners had $5 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also made a $4.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Lee Ainslie’s Maverick Capital, Greg Eisner’s Engineers Gate Manager, and Cliff Asness’s AQR Capital Management.

Let’s also examine hedge fund activity in other stocks similar to National Beverage Corp. (NASDAQ:FIZZ). We will take a look at Corporate Office Properties Trust (NYSE:OFC), Blackbaud, Inc. (NASDAQ:BLKB), ALLETE Inc (NYSE:ALE), AAON, Inc. (NASDAQ:AAON), Acacia Communications, Inc. (NASDAQ:ACIA), Cimarex Energy Co (NYSE:XEC), and Navistar International Corp (NYSE:NAV). This group of stocks’ market caps are similar to FIZZ’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OFC 20 209407 3
BLKB 19 95711 -3
ALE 25 119344 7
AAON 15 26745 4
ACIA 34 959611 12
XEC 39 556800 4
NAV 33 1245849 -3
Average 26.4 459067 3.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $459 million. That figure was $260 million in FIZZ’s case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 15 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. Our overall hedge fund sentiment score for FIZZ is 43.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on FIZZ as the stock returned 11.5% in the third quarter and outperformed the market by an even larger margin.

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