Hedge Funds Are Betting On RumbleOn, Inc. (RMBL)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of RumbleOn, Inc. (NASDAQ:RMBL).

RumbleOn, Inc. (NASDAQ:RMBL) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that RMBL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Jack Ripsteen Tim Ripsteen Potrero Capital

Jack Ripsteen of Potrero Capital Research

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to check out the latest hedge fund action encompassing RumbleOn, Inc. (NASDAQ:RMBL).

How have hedgies been trading RumbleOn, Inc. (NASDAQ:RMBL)?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 150% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RMBL over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in RumbleOn, Inc. (NASDAQ:RMBL) was held by Trellus Management Company, which reported holding $0.1 million worth of stock at the end of September. It was followed by North Run Capital with a $0 million position. Other investors bullish on the company included Potrero Capital Research, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Trellus Management Company allocated the biggest weight to RumbleOn, Inc. (NASDAQ:RMBL), around 0.13% of its 13F portfolio. North Run Capital is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to RMBL.

As aggregate interest increased, specific money managers have been driving this bullishness. Trellus Management Company, managed by Adam Usdan, established the largest position in RumbleOn, Inc. (NASDAQ:RMBL). Trellus Management Company had $0.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0 million position during the quarter. The only other fund with a brand new RMBL position is Israel Englander’s Millennium Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as RumbleOn, Inc. (NASDAQ:RMBL) but similarly valued. We will take a look at Mercurity Fintech Holding Inc. (NASDAQ:MFH), Art’s-Way Manufacturing Co., Inc. (NASDAQ:ARTW), Nortech Systems Incorporated (NASDAQ:NSYS), and Aileron Therapeutics, Inc. (NASDAQ:ALRN). This group of stocks’ market caps are similar to RMBL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MFH 1 47 0
ARTW 1 52 0
NSYS 1 183 0
ALRN 1 158 0
Average 1 110 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 1 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $0 million in RMBL’s case. Mercurity Fintech Holding Inc. (NASDAQ:MFH) is the most popular stock in this table. On the other hand Mercurity Fintech Holding Inc. (NASDAQ:MFH) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks RumbleOn, Inc. (NASDAQ:RMBL) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on RMBL as the stock returned 90.2% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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