Natural Grocers by Vitamin Cottage Inc (NGVC): Hedge Funds and Insiders Are Bullish, What Should You Do?

Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) was in 7 hedge funds’ portfolio at the end of the fourth quarter of 2012. NGVC investors should pay attention to an increase in hedge fund interest lately. There were 6 hedge funds in our database with NGVC holdings at the end of the previous quarter.

Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC)

According to most market participants, hedge funds are seen as worthless, outdated financial tools of yesteryear. While there are over 8000 funds in operation at present, we at Insider Monkey hone in on the bigwigs of this group, around 450 funds. It is widely believed that this group has its hands on the majority of all hedge funds’ total capital, and by paying attention to their highest performing stock picks, we have identified a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as key, optimistic insider trading sentiment is another way to parse down the marketplace. There are lots of reasons for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this strategy if you understand what to do (learn more here).

Now, we’re going to take a look at the recent action encompassing Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC).

What does the smart money think about Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC)?

Heading into 2013, a total of 7 of the hedge funds we track held long positions in this stock, a change of 17% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings substantially.

When looking at the hedgies we track, Donald Chiboucis’s Columbus Circle Investors had the largest position in Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC), worth close to $10.5 million, accounting for 0.1% of its total 13F portfolio. On Columbus Circle Investors’s heels is John Murphy of Alydar Capital, with a $8.2 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include John Brennan’s Sirios Capital Management, Israel Englander’s Millennium Management and Richard Driehaus’s Driehaus Capital.

Consequently, specific money managers have jumped into Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) headfirst. SAC Capital Advisors, managed by Steven Cohen, created the biggest position in Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC). SAC Capital Advisors had 1 million invested in the company at the end of the quarter.

What have insiders been doing with Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC)?

Insider purchases made by high-level executives is best served when the primary stock in question has seen transactions within the past six months. Over the latest half-year time period, Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) has experienced 1 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC). These stocks are Roundy’s Inc (NYSE:RNDY), Arden Group, Inc. (NASDAQ:ARDNA), Village Super Market, Inc. (NASDAQ:VLGEA), Core-Mark Holding Company, Inc. (NASDAQ:CORE), and Ingles Markets, Incorporated (NASDAQ:IMKTA). This group of stocks are the members of the grocery stores industry and their market caps are similar to NGVC’s market cap.