Do Hedge Funds and Insiders Love Regional Management Corp (RM)?

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Should Regional Management Corp (NYSE:RM) investors track the following data?

If you were to ask many of your fellow readers, hedge funds are viewed as overrated, old financial tools of a forgotten age. Although there are In excess of 8,000 hedge funds with their doors open in present day, Insider Monkey focuses on the masters of this club, about 525 funds. It is assumed that this group controls the lion’s share of the smart money’s total capital, and by paying attention to their highest performing picks, we’ve formulated a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year 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 outclassed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Just as necessary, optimistic insider trading sentiment is a second way to look at the financial markets. As the old adage goes: there are plenty of reasons for a corporate insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this tactic if investors understand where to look (learn more here).

Keeping this in mind, we’re going to examine the newest info surrounding Regional Management Corp (NYSE:RM).

How have hedgies been trading Regional Management Corp (NYSE:RM)?

In preparation for the third quarter, a total of 7 of the hedge funds we track were long in this stock, a change of -13% from the previous quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly.

Regional Management Corp (NYSE:RM)Out of the hedge funds we follow, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management had the largest position in Regional Management Corp (NYSE:RM), worth close to $7 million, accounting for 1.6% of its total 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which held a $1.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Andy Redleaf’s Whitebox Advisors, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.

Because Regional Management Corp (NYSE:RM) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies who sold off their entire stakes heading into Q2. Intriguingly, Philip Hempleman’s Ardsley Partners dumped the largest position of all the hedgies we watch, valued at about $5.7 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $2.3 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds heading into Q2.

Insider trading activity in Regional Management Corp (NYSE:RM)

Bullish insider trading is best served when the company in question has seen transactions within the past 180 days. Over the last half-year time frame, Regional Management Corp (NYSE:RM) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Regional Management Corp (NYSE:RM). These stocks are Nicholas Financial, Inc. (NASDAQ:NICK), Federal Agricultural Mortgage Corp. (NYSE:AGM), Asset Acceptance Capital Corp. (NASDAQ:AACC), Medallion Financial Corp (NASDAQ:TAXI), and Consumer Portfolio Services, Inc. (NASDAQ:CPSS). This group of stocks belong to the credit services industry and their market caps are closest to RM’s market cap.

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