What Smart Money Investors Think about Ruth’s Hospitality Group, Inc. (RUTH)?

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

In this article, we’ll take a closer look at Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH), which registered an increase in popularity among smart money investors from our database during the third quarter. Overall, 17 funds held shares of the company at the end of September. 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 Cascade Bancorp (NASDAQ:CACB), Revance Therapeutics Inc (NASDAQ:RVNC), and American Midstream Partners LP (NYSE:AMID) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH)?

Heading into the fourth quarter of 2016, a total of 17 funds tracked by Insider Monkey were long Ruth’s Hospitality Group, up by 6% over the quarter. By comparison, 10 hedge funds held shares or bullish call options in RUTH heading into this year. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Cliff Asness’ AQR Capital Management has the biggest position in Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH), worth close to $5.4 million. On AQR Capital Management’s heels is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital which holds a $5.3 million position. Some other members of the smart money that are bullish comprise David E. Shaw’s D E Shaw, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group. 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.

Consequently, key hedge funds have jumped into Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) headfirst. Matthew Hulsizer’s PEAK6 Capital Management initiated the largest position in Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH). PEAK6 Capital Management had $0.4 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new RUTH investors: Dmitry Balyasny’s Balyasny Asset Management,  Citadel Investment Group, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now review hedge fund activity in other stocks similar to Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH). These stocks are Cascade Bancorp (NASDAQ:CACB), Revance Therapeutics Inc (NASDAQ:RVNC), American Midstream Partners LP (NYSE:AMID), and Ring Energy Inc (NYSEMKT:REI). This group of stocks’ market values are closest to RUTH’s market value.

As you can see these stocks had an average of seven funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $32 million in RUTH’s case. Ring Energy Inc (NYSEMKT:REI) is the most popular stock in this table. On the other hand Revance Therapeutics Inc (NASDAQ:RVNC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) 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