Is NN, Inc. (NASDAQ:NNBR) a good stock to buy right now? The smart money is in a bearish mood. The number of long hedge fund bets shrunk by 6 lately. Our calculations also showed that NNBR isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a gander at the recent hedge fund action regarding NN, Inc. (NASDAQ:NNBR).
Hedge fund activity in NN, Inc. (NASDAQ:NNBR)
At Q4’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -43% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in NNBR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Legion Partners Asset Management, managed by Ted White and Christopher Kiper, holds the most valuable position in NN, Inc. (NASDAQ:NNBR). Legion Partners Asset Management has a $14.1 million position in the stock, comprising 4.3% of its 13F portfolio. On Legion Partners Asset Management’s heels is Royce & Associates, managed by Chuck Royce, which holds a $13.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism encompass Phil Frohlich’s Prescott Group Capital Management, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.
Judging by the fact that NN, Inc. (NASDAQ:NNBR) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there were a few fund managers that slashed their positions entirely last quarter. It’s worth mentioning that Peter S. Park’s Park West Asset Management said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, worth an estimated $16.7 million in stock, and Michael M. Rothenberg’s Moab Capital Partners was right behind this move, as the fund said goodbye to about $7.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 6 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as NN, Inc. (NASDAQ:NNBR) but similarly valued. These stocks are NRC Group Holdings Corp. (NYSE:NRCG), Lawson Products, Inc. (NASDAQ:LAWS), Endeavour Silver Corp. (CAN) (NYSE:EXK), and Source Capital, Inc. (NYSE:SOR). All of these stocks’ market caps resemble NNBR’s market cap.
[table]
Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position
NRCG,5,6737,5
LAWS,4,9484,-1
EXK,7,16194,2
SOR,2,7978,1
Average,4.5,10098,1.75
[/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $34 million in NNBR’s case. Endeavour Silver Corp. (CAN) (NYSE:EXK) is the most popular stock in this table. On the other hand Source Capital, Inc. (NYSE:SOR) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks NN, Inc. (NASDAQ:NNBR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
