Hedge Funds Double Down On Altisource Residential Corp (RESI): Are You Missing the Boat?

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As aggregate interest increased, some big names have jumped into Altisource Residential Corp (NYSE:RESI) headfirst. Portolan Capital Management assembled the most outsized position in Altisource Residential Corp (NYSE:RESI). Millennium Management also initiated a $2.5 million position during the quarter. The following funds were also among the new RESI investors: Vishal Bhutani and Joshua Bederman’s Pyrrho Capital Management, David E. Shaw’s D E Shaw, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now review hedge fund activity in other stocks similar to Altisource Residential Corp (NYSE:RESI). We will take a look at Applied Micro Circuits Corporation (NASDAQ:AMCC), Quanex Building Products Corporation (NYSE:NX), Galapagos NV (ADR) (NASDAQ:GLPG), and William Lyon Homes (NYSE:WLH). This group of stocks’ market valuations are similar to RESI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMCC 15 94512 1
NX 13 45742 -3
GLPG 16 168438 2
WLH 17 298596 1

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $152 million. That figure was $56 million in RESI’s case. William Lyon Homes (NYSE:WLH) is the most popular stock in this table. On the other hand Quanex Building Products Corporation (NYSE:NX) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Altisource Residential Corp (NYSE:RESI) is only as popular as NX. Considering that hedge funds aren’t overly 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, especially given the Q3 surge in smart money ownership of the stock. We’ll wait to see how hedge funds play it in Q4 to determine whether it’s a great time to invest.

Disclosure: None

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