Hedge Funds Are Unloading Rubicon Minerals Corp. (USA) (RBY)

Hedge fund managers like David Einhorn, Dan Loeb, and Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY).

Is Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY) a buy, sell, or hold? The smart money is selling. The number of bullish hedge fund positions went down by 3 recently. At the end of this article we will also compare Rubicon Minerals Corp. to other stocks including Arctic Cat Inc (NASDAQ:ACAT), Pace Holdings Corp (NASDAQ:PACE), and Bank of Marin Bancorp (NASDAQ:BMRC) to get a better sense of its popularity.

In the eyes of most shareholders, hedge funds are viewed as slow, outdated financial vehicles of the past. While there are greater than 8,000 funds trading at the moment, we choose to focus on the elite of this group, around 700 funds. These money managers oversee the majority of all hedge funds’ total asset base, and by paying attention to their top picks, Insider Monkey has discovered many investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points a year for a decade in their back tests.

With all of this in mind, we’re going to review the recent action surrounding Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY).

Hedge fund activity in Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY)

At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a 43% slide from the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jonathan Savitz’s Greywolf Capital Management has the most valuable position in Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY), worth close to $26.3 million, accounting for 4.3% of its total 13F portfolio. The second-most bullish fund manager is Israel Englander of Millennium Management, with a $1.2 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism consist of Eric Sprott’s Sprott Asset Management, and D E Shaw.

Because Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of funds that elected to cut their full holdings heading into Q4. It’s worth mentioning that Peter Franklin Palmedo’s Sun Valley Gold dumped the largest position of the 700 funds watched by Insider Monkey, worth about $5.8 million in stock. Andrew Weiss’ fund, Weiss Asset Management, also dropped its stock, about $1.1 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Rubicon Minerals Corp. (USA) (NYSEMKT:RBY). We will take a look at Arctic Cat Inc (NASDAQ:ACAT), Pace Holdings Corp (NASDAQ:PACE), Bank of Marin Bancorp (NASDAQ:BMRC), and The Bancorp, Inc. (NASDAQ:TBBK). This group of stocks’ market valuations match Rubicon Minerals Corp.’s market valuation.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $28 million in Rubicon Minerals Corp.’s case. Pace Holdings Corp (NASDAQ:PACE) is the most popular stock in this table. On the other hand Bank of Marin Bancorp (NASDAQ:BMRC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Rubicon Minerals Corp. (USA) (NYSEAMEX:RBY) is tied for the least popular with Bank of Marin Bancorp. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, it may simply be that not many have given it a good look. In either case more research is needed.