Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards National Presto Industries Inc. (NYSE:NPK) to find out whether there were any major changes in hedge funds’ views.
Is NPK a good stock to buy now? National Presto Industries Inc. (NYSE:NPK) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. National Presto Industries Inc. (NYSE:NPK) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 15. There were 8 hedge funds in our database with NPK positions at the end of the second quarter. Our calculations also showed that NPK 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.
To the average investor there are a large number of methods stock traders put to use to evaluate their stock investments. A couple of the best methods are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outclass their index-focused peers by a solid amount (see the details here).
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 let’s go over the key hedge fund action regarding National Presto Industries Inc. (NYSE:NPK).
Do Hedge Funds Think NPK Is A Good Stock To Buy Now?
At third quarter’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NPK over the last 21 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in National Presto Industries Inc. (NYSE:NPK), which was worth $35.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $18.6 million worth of shares. Citadel Investment Group, AQR Capital Management, and Arrowstreet Capital 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 Royce & Associates allocated the biggest weight to National Presto Industries Inc. (NYSE:NPK), around 0.38% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, earmarking 0.09 percent of its 13F equity portfolio to NPK.
As aggregate interest increased, specific money managers have jumped into National Presto Industries Inc. (NYSE:NPK) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in National Presto Industries Inc. (NYSE:NPK). Arrowstreet Capital had $1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Donald Sussman’s Paloma Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as National Presto Industries Inc. (NYSE:NPK) but similarly valued. These stocks are Gladstone Commercial Corporation (NASDAQ:GOOD), Eagle Pharmaceuticals Inc (NASDAQ:EGRX), Amneal Pharmaceuticals, Inc. (NYSE:AMRX), Loop Industries, Inc. (NASDAQ:LOOP), Agilysys, Inc. (NASDAQ:AGYS), Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), and Nicolet Bankshares Inc. (NASDAQ:NCBS). This group of stocks’ market values resemble NPK’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 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $60 million in NPK’s case. Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is the most popular stock in this table. On the other hand Nicolet Bankshares Inc. (NASDAQ:NCBS) is the least popular one with only 1 bullish hedge fund positions. National Presto Industries Inc. (NYSE:NPK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NPK is 50.8. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on NPK as the stock returned 12.7% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.