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This Metric Says You Are Smart to Buy Rent-A-Center Inc (NASDAQ:RCII)

Rent-A-Center Inc (NASDAQ:RCII) has experienced an increase in support from the world’s most elite money managers of late.

If you’d ask most stock holders, hedge funds are perceived as slow, old financial vehicles of yesteryear. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey look at the aristocrats of this club, about 450 funds. It is widely believed that this group has its hands on the lion’s share of the hedge fund industry’s total capital, and by tracking their top investments, we have come up with a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Phill Gross

Equally as key, optimistic insider trading activity is a second way to parse down the world of equities. As the old adage goes: there are a number of stimuli for an executive to downsize shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the impressive potential of this tactic if piggybackers understand where to look (learn more here).

Consequently, it’s important to take a glance at the key action encompassing Rent-A-Center Inc (NASDAQ:RCII).

How are hedge funds trading Rent-A-Center Inc (NASDAQ:RCII)?

Heading into 2013, a total of 16 of the hedge funds we track held long positions in this stock, a change of 14% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably.

When looking at the hedgies we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Rent-A-Center Inc (NASDAQ:RCII). Adage Capital Management has a $92 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Roberto Mignone of Bridger Management, with a $46 million position; the fund has 3.3% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Richard S. Pzena’s Pzena Investment Management, Eric Edidin and Josh Lobel’s Archer Capital Management and Cliff Asness’s AQR Capital Management.

As one would reasonably expect, key money managers have jumped into Rent-A-Center Inc (NASDAQ:RCII) headfirst. Archer Capital Management, managed by Eric Edidin and Josh Lobel, established the most outsized position in Rent-A-Center Inc (NASDAQ:RCII). Archer Capital Management had 15 million invested in the company at the end of the quarter. Mike Vranos’s Ellington also initiated a $0 million position during the quarter. The following funds were also among the new RCII investors: Neil Chriss’s Hutchin Hill Capital and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

What do corporate executives and insiders think about Rent-A-Center Inc (NASDAQ:RCII)?

Insider buying is particularly usable when the company we’re looking at has experienced transactions within the past half-year. Over the latest six-month time frame, Rent-A-Center Inc (NASDAQ:RCII) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

With the returns shown by the aforementioned tactics, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Rent-A-Center Inc (NASDAQ:RCII) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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