Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is Nordic American Tanker Ltd (NAT) A Good Stock To Buy?

Is Nordic American Tanker Ltd (NYSE:NAT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Hedge fund interest in Nordic American Tanker Ltd (NYSE:NAT) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare NAT to other stocks including Gold Resource Corporation (NYSEAMEX:GORO), Axovant Sciences Ltd (NYSE:AXON), and Capital Senior Living Corporation (NYSE:CSU) to get a better sense of its popularity.

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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Clint Carlson, Carlson Capital

Let’s check out the fresh hedge fund action regarding Nordic American Tanker Ltd (NYSE:NAT).

How have hedgies been trading Nordic American Tanker Ltd (NYSE:NAT)?

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from the previous quarter. The graph below displays the number of hedge funds with bullish position in NAT over the last 13 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

No of Hedge Funds NAT Positions

The largest stake in Nordic American Tanker Ltd (NYSE:NAT) was held by Carlson Capital, which reported holding $2.7 million worth of stock at the end of September. It was followed by Rubric Capital Management with a $0.6 million position. Other investors bullish on the company included 683 Capital Partners, QVT Financial, and Citadel Investment Group.

Due to the fact that Nordic American Tanker Ltd (NYSE:NAT) has faced declining sentiment from the smart money, it’s easy to see that there lies a certain “tier” of funds that elected to cut their entire stakes heading into Q3. Intriguingly, Jim Simons’s Renaissance Technologies dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at close to $0.1 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund sold off about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Nordic American Tanker Ltd (NYSE:NAT) but similarly valued. These stocks are Gold Resource Corporation (NYSEAMEX:GORO), Axovant Sciences Ltd (NASDAQ:AXON), Capital Senior Living Corporation (NYSE:CSU), and Fluidigm Corporation (NASDAQ:FLDM). This group of stocks’ market values are similar to NAT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GORO 7 10926 -3
AXON 9 11864 -2
CSU 13 108111 0
FLDM 12 105217 0
Average 10.25 59030 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $5 million in NAT’s case. Capital Senior Living Corporation (NYSE:CSU) is the most popular stock in this table. On the other hand Gold Resource Corporation (NYSEAMEX:GORO) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Nordic American Tanker Ltd (NYSE:NAT) is even less popular than GORO. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.