The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Nordic American Tankers Ltd (NYSE:NAT).
Is NAT a good stock to buy now? Nordic American Tankers Ltd (NYSE:NAT) investors should pay attention to an increase in hedge fund interest lately. Nordic American Tankers Ltd (NYSE:NAT) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 18. Our calculations also showed that NAT isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind we’re going to analyze the latest hedge fund action regarding Nordic American Tankers Ltd (NYSE:NAT).
Do Hedge Funds Think NAT Is A Good Stock To Buy Now?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in NAT over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Coatue Management was the largest shareholder of Nordic American Tankers Ltd (NYSE:NAT), with a stake worth $9.1 million reported as of the end of September. Trailing Coatue Management was Arrowstreet Capital, which amassed a stake valued at $7.3 million. Gotham Asset Management, Citadel Investment Group, and Tudor Investment Corp were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Gotham Asset Management allocated the biggest weight to Nordic American Tankers Ltd (NYSE:NAT), around 0.08% of its 13F portfolio. Coatue Management is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to NAT.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Coatue Management, managed by Philippe Laffont, established the most valuable position in Nordic American Tankers Ltd (NYSE:NAT). Coatue Management had $9.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners, Ken Griffin’s Citadel Investment Group, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Nordic American Tankers Ltd (NYSE:NAT) but similarly valued. We will take a look at Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), Rite Aid Corporation (NYSE:RAD), Quotient Limited (NASDAQ:QTNT), Odonate Therapeutics, Inc. (NASDAQ:ODT), ViewRay, Inc. (NASDAQ:VRAY), Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX), and 111, Inc. (NASDAQ:YI). This group of stocks’ market values are closest to NAT’s market value.
|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 13.7 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $20 million in NAT’s case. Quotient Limited (NASDAQ:QTNT) is the most popular stock in this table. On the other hand 111, Inc. (NASDAQ:YI) is the least popular one with only 4 bullish hedge fund positions. Nordic American Tankers Ltd (NYSE:NAT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NAT is 40.3. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately NAT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NAT investors were disappointed as the stock returned -5.7% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.