Resources Connection, Inc. (RECN) Not Doing Enough To Attract Smart Money

After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Resources Connection, Inc. (NASDAQ:RECN).

Is Resources Connection, Inc. (NASDAQ:RECN) a healthy stock for your portfolio? Prominent investors are turning less bullish. The number of bullish hedge fund bets retreated by 1 recently, falling to 11. At the end of this article we will also compare Resources Connection, Inc. to other stocks including Forrester Research, Inc. (NASDAQ:FORR), Vascular Solutions, Inc. (NASDAQ:VASC), and Kraton Performance Polymers Inc (NYSE:KRA) to get a better sense of its popularity.

To most market participants, hedge funds are seen as worthless, outdated investment vehicles of yesteryear. While there are greater than 8,000 funds with their doors open at the moment, our experts choose to focus on the crème de la crème of this club, about 700 funds. These money managers orchestrate the lion’s share of the hedge fund industry’s total capital, and by tailing their unrivaled picks, Insider Monkey has discovered many investment strategies that have historically surpassed the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s view the fresh action encompassing Resources Connection, Inc. (NASDAQ:RECN).

How have hedgies been trading Resources Connection, Inc. (NASDAQ:RECN)?

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 8% drop from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes substantially (or had already accumulated large positions).

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in Resources Connection, Inc. (NASDAQ:RECN), worth close to $15.8 million, comprising 0.1% of its total 13F portfolio. Coming in second is Renaissance Technologies, with a $3.9 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish contain Ken Fisher’s Fisher Asset Management, Cliff Asness’ AQR Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Because Resources Connection, Inc. (NASDAQ:RECN) has faced falling interest from the smart money, it’s safe to say that there was a specific group of funds who sold off their entire stakes last quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group said goodbye to the biggest investment of the 700 funds watched by Insider Monkey, comprising about $1.9 million in stock. Peter Muller’s fund, PDT Partners also sold off its stock, about $0.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 fund last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Resources Connection, Inc. (NASDAQ:RECN). These stocks are Forrester Research, Inc. (NASDAQ:FORR), Vascular Solutions, Inc. (NASDAQ:VASC), Kraton Performance Polymers Inc (NYSE:KRA), and Xura Inc (NASDAQ:MESG). This group of stocks’ market values are similar to Resources Connection, Inc.’s market value.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $32 million in Resources Connection, Inc.’s case. Kraton Performance Polymers Inc (NYSE:KRA) is the most popular stock in this table. On the other hand Forrester Research, Inc. (NASDAQ:FORR) is the least popular one with only 10 bullish hedge fund positions. Resources Connection, Inc. (NASDAQ:RECN) is not the least popular stock in this group but hedge fund interest is still below average and there was less money invested in it than any of the other stocks. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Kraton Performance Polymers Inc might be a better candidate to consider for a long position.