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Hedge Funds Are Dumping Renewable Energy Group Inc (REGI)

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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Renewable Energy Group Inc (NASDAQ:REGI).

Renewable Energy Group Inc (NASDAQ:REGI) has experienced a decrease in enthusiasm from smart money of late. Our calculations also showed that REGI 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.

According to most shareholders, hedge funds are perceived as underperforming, outdated financial vehicles of years past. While there are over 8000 funds in operation at present, Our researchers hone in on the moguls of this group, around 850 funds. These money managers have their hands on the lion’s share of all hedge funds’ total asset base, and by paying attention to their first-class picks, Insider Monkey has deciphered several investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the latest hedge fund action encompassing Renewable Energy Group Inc (NASDAQ:REGI).

How are hedge funds trading Renewable Energy Group Inc (NASDAQ:REGI)?

Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in REGI 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 Renewable Energy Group Inc (NASDAQ:REGI) was held by Parsifal Capital Management, which reported holding $47 million worth of stock at the end of September. It was followed by Lansdowne Partners with a $26.6 million position. Other investors bullish on the company included Citadel Investment Group, Sabrepoint Capital, and Arosa Capital Management. In terms of the portfolio weights assigned to each position Parsifal Capital Management allocated the biggest weight to Renewable Energy Group Inc (NASDAQ:REGI), around 17.23% of its 13F portfolio. Sabrepoint Capital is also relatively very bullish on the stock, designating 3.59 percent of its 13F equity portfolio to REGI.

Judging by the fact that Renewable Energy Group Inc (NASDAQ:REGI) has faced a decline in interest from hedge fund managers, logic holds that there exists a select few hedgies who sold off their positions entirely heading into Q4. It’s worth mentioning that David Rosen’s Rubric Capital Management dropped the biggest stake of the 750 funds tracked by Insider Monkey, worth close to $35.2 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $7.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 5 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Renewable Energy Group Inc (NASDAQ:REGI). These stocks are HeadHunter Group PLC (NASDAQ:HHR), Sprout Social, Inc. (NASDAQ:SPT), The Macerich Company (NYSE:MAC), and Kite Realty Group Trust (NYSE:KRG). All of these stocks’ market caps match REGI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HHR 5 31273 -1
SPT 16 108149 -3
MAC 21 41257 -5
KRG 8 39474 -5
Average 12.5 55038 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $120 million in REGI’s case. The Macerich Company (NYSE:MAC) is the most popular stock in this table. On the other hand HeadHunter Group PLC (NASDAQ:HHR) is the least popular one with only 5 bullish hedge fund positions. Renewable Energy Group Inc (NASDAQ:REGI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately REGI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on REGI were disappointed as the stock returned 12.2% during the same time period 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 many of these stocks already outperformed the market so far this year.

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