Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 12 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of National Bank Holdings Corporation (NYSE:NBHC).

National Bank Holdings Corporation (NYSE:NBHC) was in 10 hedge funds' portfolios at the end of June. NBHC has seen an increase in support from the world's most elite money managers in recent months. There were 8 hedge funds in our database with NBHC positions at the end of the previous quarter. Our calculations also showed that NBHC isn't among the 30 most popular stocks among hedge funds (see the video below).

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are several formulas stock traders can use to evaluate publicly traded companies. A pair of the less utilized formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the best investment managers can trounce their index-focused peers by a healthy amount (see the details here).

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a gander at the key hedge fund action surrounding National Bank Holdings Corporation (NYSE:NBHC).

Hedge fund activity in National Bank Holdings Corporation (NYSE:NBHC)

Heading into the third quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the first quarter of 2019. On the other hand, there were a total of 9 hedge funds with a bullish position in NBHC a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in National Bank Holdings Corporation (NYSE:NBHC) was held by Renaissance Technologies, which reported holding $55.3 million worth of stock at the end of March. It was followed by Elizabeth Park Capital Management with a $16.2 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and D E Shaw.