New Frontier Corp (NFC): Hedge Funds Are Nibbling

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of New Frontier Corp (NYSE:NFC).

New Frontier Corp (NYSE:NFC) shareholders have witnessed an increase in hedge fund sentiment in recent months. Our calculations also showed that NFC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

According to most stock holders, hedge funds are seen as slow, outdated financial tools of the past. While there are greater than 8000 funds trading at present, Our experts look at the bigwigs of this group, about 750 funds. These investment experts have their hands on bulk of the hedge fund industry’s total capital, and by keeping track of their best picks, Insider Monkey has brought to light many investment strategies that have historically outperformed the 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 May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Jeffrey Tannenbaum of Fir Tree

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the latest hedge fund action regarding New Frontier Corp (NYSE:NFC).

How have hedgies been trading New Frontier Corp (NYSE:NFC)?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in NFC a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, Glazer Capital held the most valuable stake in New Frontier Corp (NYSE:NFC), which was worth $22.8 million at the end of the third quarter. On the second spot was Fir Tree which amassed $10.1 million worth of shares. HBK Investments, Maso Capital, and Alyeska Investment Group 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 Glazer Capital allocated the biggest weight to New Frontier Corp (NYSE:NFC), around 2.8% of its 13F portfolio. Maso Capital is also relatively very bullish on the stock, designating 2.56 percent of its 13F equity portfolio to NFC.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Maso Capital, managed by Manoj Jain and Sohit Khurana, assembled the most outsized position in New Frontier Corp (NYSE:NFC). Maso Capital had $7.1 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also initiated a $1.9 million position during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as New Frontier Corp (NYSE:NFC) but similarly valued. These stocks are Chuy’s Holdings Inc (NASDAQ:CHUY), IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP), Sierra Bancorp (NASDAQ:BSRR), and Purple Innovation, Inc. (NASDAQ:PRPL). All of these stocks’ market caps are closest to NFC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHUY 10 27713 -2
IRCP 4 13177 0
BSRR 10 14970 3
PRPL 5 48660 2
Average 7.25 26130 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $72 million in NFC’s case. Chuy’s Holdings Inc (NASDAQ:CHUY) is the most popular stock in this table. On the other hand IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks New Frontier Corp (NYSE:NFC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NFC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NFC were disappointed as the stock returned 0.9% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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