In this article you are going to find out whether hedge funds think Newpark Resources Inc (NYSE:NR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is NR a good stock to buy now? Newpark Resources Inc (NYSE:NR) was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 18. NR has seen a decrease in activity from the world’s largest hedge funds of late. There were 16 hedge funds in our database with NR positions at the end of the second quarter. Our calculations also showed that NR 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.
According to most traders, hedge funds are perceived as worthless, old investment tools of the past. While there are greater than 8000 funds with their doors open at the moment, Our researchers choose to focus on the top tier of this club, around 850 funds. Most estimates calculate that this group of people orchestrate the lion’s share of the smart money’s total asset base, and by monitoring their finest picks, Insider Monkey has brought to light a few investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year 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 .
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. Keeping this in mind let’s check out the recent hedge fund action encompassing Newpark Resources Inc (NYSE:NR).
Do Hedge Funds Think NR Is A Good Stock To Buy Now?
At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NR over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in Newpark Resources Inc (NYSE:NR) was held by Renaissance Technologies, which reported holding $1 million worth of stock at the end of September. It was followed by Royce & Associates with a $0.9 million position. Other investors bullish on the company included Marshall Wace LLP, Arrowstreet Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Prescott Group Capital Management allocated the biggest weight to Newpark Resources Inc (NYSE:NR), around 0.05% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to NR.
Seeing as Newpark Resources Inc (NYSE:NR) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers that slashed their full holdings heading into Q4. At the top of the heap, Ken Griffin’s Citadel Investment Group cut the biggest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $1.6 million in stock. Bruce Kovner’s fund, Caxton Associates LP, also said goodbye to its stock, about $0.1 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds heading into Q4.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Newpark Resources Inc (NYSE:NR) but similarly valued. These stocks are Crexendo, Inc. (NASDAQ:CXDO), Catalyst Biosciences Inc (NASDAQ:CBIO), Marchex, Inc. (NASDAQ:MCHX), Greenlane Holdings, Inc. (NASDAQ:GNLN), On Deck Capital Inc (NYSE:ONDK), Oak Valley Bancorp (CA) (NASDAQ:OVLY), and Westwood Holdings Group, Inc. (NYSE:WHG). This group of stocks’ market values resemble NR’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 7.9 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $6 million in NR’s case. Catalyst Biosciences Inc (NASDAQ:CBIO) is the most popular stock in this table. On the other hand Oak Valley Bancorp (CA) (NASDAQ:OVLY) is the least popular one with only 1 bullish hedge fund positions. Newpark Resources Inc (NYSE:NR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NR is 75.7. 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 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on NR as the stock returned 85.7% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.