Do Hedge Funds Love RYB Education, Inc. (RYB)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about RYB Education, Inc. (NYSE:RYB) in this article.

RYB Education, Inc. (NYSE:RYB) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of September. Our calculations also showed that RYB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare RYB to other stocks including Braemar Hotels & Resorts Inc. (NYSE:BHR), Zagg Inc (NASDAQ:ZAGG), and Orion Group Holdings, Inc. (NYSE:ORN) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are a multitude of indicators stock traders put to use to value publicly traded companies. A couple of the best indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best fund managers can beat the broader indices by a solid margin (see the details here).

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the key hedge fund action surrounding RYB Education, Inc. (NYSE:RYB).

How have hedgies been trading RYB Education, Inc. (NYSE:RYB)?

At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RYB over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is RYB A Good Stock To Buy?

The largest stake in RYB Education, Inc. (NYSE:RYB) was held by Yiheng Capital, which reported holding $4.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.8 million position. The only other hedge fund that is bullish on the company was D E Shaw.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as RYB Education, Inc. (NYSE:RYB) but similarly valued. We will take a look at Braemar Hotels & Resorts Inc. (NYSE:BHR), Zagg Inc (NASDAQ:ZAGG), Orion Group Holdings, Inc. (NYSE:ORN), Severn Bancorp Inc (NASDAQ:SVBI), S&W Seed Company (NASDAQ:SANW), USA Truck, Inc. (NASDAQ:USAK), and Pixelworks, Inc. (NASDAQ:PXLW). All of these stocks’ market caps are similar to RYB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BHR 14 18067 -3
ZAGG 10 12317 -2
ORN 10 4922 3
SVBI 4 14532 0
SANW 6 53342 0
USAK 8 2324 5
PXLW 9 4915 0
Average 8.7 15774 0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $6 million in RYB’s case. Braemar Hotels & Resorts Inc. (NYSE:BHR) is the most popular stock in this table. On the other hand Severn Bancorp Inc (NASDAQ:SVBI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks RYB Education, Inc. (NYSE:RYB) is even less popular than SVBI. Our overall hedge fund sentiment score for RYB is 9.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards RYB. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately RYB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); RYB investors were disappointed as the stock returned -10.2% since the end of the third quarter (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.