Is Nicholas Financial (NICK) A Good Stock To Buy?

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Nicholas Financial, Inc. (NASDAQ:NICK) based on that data.

Hedge fund interest in Nicholas Financial, Inc. (NASDAQ:NICK) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that NICK 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). 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 Exela Technologies, Inc. (NASDAQ:XELA), Allena Pharmaceuticals, Inc. (NASDAQ:ALNA), and HyreCar Inc. (NASDAQ:HYRE) to gather more data points. Our calculations also showed that NICK 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.

If you’d ask most stock holders, hedge funds are assumed to be underperforming, outdated investment tools of the past. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the leaders of this club, around 850 funds. Most estimates calculate that this group of people orchestrate bulk of the smart money’s total asset base, and by tracking their matchless stock picks, Insider Monkey has come up with several investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .


Jim Simons of Renaissance Technologies

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 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.Now let’s go over the new hedge fund action surrounding Nicholas Financial, Inc. (NASDAQ:NICK).

Hedge fund activity in Nicholas Financial, Inc. (NASDAQ:NICK)

At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in NICK over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is NICK A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Adam Peterson’s Magnolia Capital Fund has the biggest position in Nicholas Financial, Inc. (NASDAQ:NICK), worth close to $15.1 million, accounting for 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies,  which holds a $3.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Magnolia Capital Fund allocated the biggest weight to Nicholas Financial, Inc. (NASDAQ:NICK), around 2.2% of its 13F portfolio. Almitas Capital is also relatively very bullish on the stock, dishing out 0.74 percent of its 13F equity portfolio to NICK.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Nicholas Financial, Inc. (NASDAQ:NICK) but similarly valued. We will take a look at Exela Technologies, Inc. (NASDAQ:XELA), Allena Pharmaceuticals, Inc. (NASDAQ:ALNA), HyreCar Inc. (NASDAQ:HYRE), Aqua Metals, Inc. (NASDAQ:AQMS), Richardson Electronics, Ltd. (NASDAQ:RELL), CohBar, Inc. (NASDAQ:CWBR), and Red Lion Hotels Corporation (NYSE:RLH). This group of stocks’ market caps are closest to NICK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
XELA 5 6710 -4
ALNA 2 5350 -4
HYRE 8 10722 2
AQMS 2 3014 -1
RELL 4 9308 0
CWBR 2 432 0
RLH 9 23046 -2
Average 4.6 8369 -1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.6 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $19 million in NICK’s case. Red Lion Hotels Corporation (NYSE:RLH) is the most popular stock in this table. On the other hand Allena Pharmaceuticals, Inc. (NASDAQ:ALNA) is the least popular one with only 2 bullish hedge fund positions. Nicholas Financial, Inc. (NASDAQ:NICK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NICK is 30.1. 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 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 28.1% in 2020 through November 23rd and beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on NICK, though not to the same extent, as the stock returned 6.7% since the end of Q3 (through November 23rd) and outperformed the market.

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