Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Northern Technologies International Corp (NASDAQ:NTIC) in this article.
Northern Technologies International Corp (NASDAQ:NTIC) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that NTIC 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). At the end of this article we will also compare NTIC to other stocks including iMedia Brands, Inc. (NASDAQ:IMBI), Computer Task Group, Inc. (NASDAQ:CTG), and Core Molding Technologies, Inc. (NYSE:CMT) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jeffrey Bronchick of Cove Street Capital
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 10 most profitable companies in the world 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 we're going to go over the new hedge fund action regarding Northern Technologies International Corp (NASDAQ:NTIC).
What does smart money think about Northern Technologies International Corp (NASDAQ:NTIC)?
At third quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. By comparison, 5 hedge funds held shares or bullish call options in NTIC a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Peter Schliemann's Rutabaga Capital Management has the biggest position in Northern Technologies International Corp (NASDAQ:NTIC), worth close to $2.8 million, accounting for 1.6% of its total 13F portfolio. The second largest stake of Renaissance Technologies, with a $1.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Jeffrey Bronchick's Cove Street Capital, Gavin Saitowitz and Cisco J. del Valle's Springbok Capital and . In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Northern Technologies International Corp (NASDAQ:NTIC), around 1.61% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, designating 0.16 percent of its 13F equity portfolio to NTIC.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now review hedge fund activity in other stocks similar to Northern Technologies International Corp (NASDAQ:NTIC). We will take a look at iMedia Brands, Inc. (NASDAQ:IMBI), Computer Task Group, Inc. (NASDAQ:CTG), Core Molding Technologies, Inc. (NYSE:CMT), Drive Shack Inc. (NYSE:DS), Advanced Emissions Solutions, Inc. (NASDAQ:ADES), Idera Pharmaceuticals Inc (NASDAQ:IDRA), and Rockwell Medical Inc (NASDAQ:RMTI). All of these stocks' market caps are similar to NTIC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IMBI,5,3730,4 CTG,5,12432,0 CMT,4,11881,0 DS,7,1378,-2 ADES,7,13306,0 IDRA,7,12828,1 RMTI,4,4228,0 Average,5.6,8540,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $5 million in NTIC's case. Drive Shack Inc. (NYSE:DS) is the most popular stock in this table. On the other hand Core Molding Technologies, Inc. (NYSE:CMT) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Northern Technologies International Corp (NASDAQ:NTIC) is even less popular than CMT. Our overall hedge fund sentiment score for NTIC is 25. 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. Hedge funds clearly dropped the ball on NTIC as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on NTIC as the stock returned 12.7% since Q3 (through November 27th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.