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Hedge Funds Are Cashing Out Of RigNet Inc (RNET)

In this article we will take a look at whether hedge funds think RigNet Inc (NASDAQ:RNET) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

RigNet Inc (NASDAQ:RNET) was in 3 hedge funds’ portfolios at the end of March. RNET investors should be aware of a decrease in hedge fund sentiment lately. There were 4 hedge funds in our database with RNET holdings at the end of the previous quarter. Our calculations also showed that RNET 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 44 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.

RENAISSANCE TECHNOLOGIES

Jim Simons Founder of Renaissance Technologies

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the recent hedge fund action regarding RigNet Inc (NASDAQ:RNET).

How have hedgies been trading RigNet Inc (NASDAQ:RNET)?

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RNET over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, G2 Investment Partners Management held the most valuable stake in RigNet Inc (NASDAQ:RNET), which was worth $1.9 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $1 million worth of shares. Invenomic Capital Management was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position G2 Investment Partners Management allocated the biggest weight to RigNet Inc (NASDAQ:RNET), around 0.64% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to RNET.

Seeing as RigNet Inc (NASDAQ:RNET) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers who were dropping their entire stakes by the end of the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management dropped the largest investment of the “upper crust” of funds monitored by Insider Monkey, totaling about $0.1 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dumped its stock, about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks similar to RigNet Inc (NASDAQ:RNET). These stocks are Jupai Holdings Limited (NYSE:JP), Deswell Industries, Inc. (NASDAQ:DSWL), Entasis Therapeutics Holdings Inc. (NASDAQ:ETTX), and Tonix Pharmaceuticals Holding Corp. (NASDAQ:TNXP). This group of stocks’ market values resemble RNET’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JP 2 106 -1
DSWL 1 50 -1
ETTX 2 2868 0
TNXP 2 277 1
Average 1.75 825 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 1.75 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $3 million in RNET’s case. Jupai Holdings Limited (NYSE:JP) is the most popular stock in this table. On the other hand Deswell Industries, Inc. (NASDAQ:DSWL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks RigNet Inc (NASDAQ:RNET) 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 gained 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. Unfortunately RNET wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RNET were disappointed as the stock returned -43.3% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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