Hedge Funds Are Getting Out Of Radian Group Inc (RDN)

In this article we will analyze whether Radian Group Inc (NYSE:RDN) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Radian Group Inc (NYSE:RDN) was in 27 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 38. RDN has seen a decrease in enthusiasm from smart money recently. There were 30 hedge funds in our database with RDN positions at the end of the second quarter. Our calculations also showed that RDN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s check out the recent hedge fund action surrounding Radian Group Inc (NYSE:RDN).

Do Hedge Funds Think RDN Is A Good Stock To Buy Now?

At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RDN over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Rima Senvest Management, managed by Richard Mashaal, holds the biggest position in Radian Group Inc (NYSE:RDN). Rima Senvest Management has a $76.4 million position in the stock, comprising 2.2% of its 13F portfolio. Sitting at the No. 2 spot is Brian J. Higgins of King Street Capital, with a $57.4 million position; the fund has 4.8% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions contain Jonathan Kolatch’s Redwood Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and David Rosen’s Rubric Capital Management. In terms of the portfolio weights assigned to each position Callodine Capital Management allocated the biggest weight to Radian Group Inc (NYSE:RDN), around 6.29% of its 13F portfolio. King Street Capital is also relatively very bullish on the stock, designating 4.84 percent of its 13F equity portfolio to RDN.

Due to the fact that Radian Group Inc (NYSE:RDN) has experienced a decline in interest from hedge fund managers, it’s safe to say that there is a sect of fund managers who were dropping their full holdings by the end of the third quarter. It’s worth mentioning that Steven Tananbaum’s GoldenTree Asset Management dropped the largest investment of all the hedgies followed by Insider Monkey, valued at about $17.4 million in stock. Noam Gottesman’s fund, GLG Partners, also sold off its stock, about $1.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Radian Group Inc (NYSE:RDN) but similarly valued. We will take a look at LivaNova PLC (NASDAQ:LIVN), UFP Industries, Inc. (NASDAQ:UFPI), Nordstrom, Inc. (NYSE:JWN), Sanderson Farms, Inc. (NASDAQ:SAFM), Portland General Electric Company (NYSE:POR), Hannon Armstrong Sustnbl Infrstr Cap Inc (NYSE:HASI), and Shutterstock Inc (NYSE:SSTK). This group of stocks’ market caps match RDN’s market cap.

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As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $382 million. That figure was $380 million in RDN’s case. LivaNova PLC (NASDAQ:LIVN) is the most popular stock in this table. On the other hand Portland General Electric Company (NYSE:POR) is the least popular one with only 15 bullish hedge fund positions. Radian Group Inc (NYSE:RDN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RDN is 58.6. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately RDN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RDN were disappointed as the stock returned -8.3% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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