Is RigNet Inc (RNET) A Good Stock To Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards RigNet Inc (NASDAQ:RNET).

Hedge fund interest in RigNet Inc (NASDAQ:RNET) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as JP Energy Partners LP (NYSE:JPEP), Macatawa Bank Corporation (NASDAQ:MCBC), and TRC Companies, Inc. (NYSE:TRR) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

Keeping this in mind, let’s check out the fresh action regarding RigNet Inc (NASDAQ:RNET).

What does the smart money think about RigNet Inc (NASDAQ:RNET)?

Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the second quarter of 2016. On the other hand, there were a total of 7 hedge funds with a bullish position in RNET at the beginning of this year. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in RigNet Inc (NASDAQ:RNET). According to regulatory filings, the fund has a $5.5 million position in the stock, comprising less than 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Cannell Capital, led by J. Carlo Cannell, which holds a $4.6 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: PDT Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Hutchin Hill Capital).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as RigNet Inc (NASDAQ:RNET) but similarly valued. These stocks are JP Energy Partners LP (NYSE:JPEP), Macatawa Bank Corporation (NASDAQ:MCBC), TRC Companies, Inc. (NYSE:TRR), and Syndax Pharmaceuticals Inc (NASDAQ:SNDX). All of these stocks’ market caps are closest to RNET’s market cap.

As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $14 million in RNET’s case. TRC Companies, Inc. (NYSE:TRR) is the most popular stock in this table. On the other hand Macatawa Bank Corporation (NASDAQ:MCBC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks RigNet Inc (NASDAQ:RNET) 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.