Hedge Funds Are Piling Into RBC Bearings Incorporated (ROLL)

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards RBC Bearings Incorporated (NASDAQ:ROLL).

RBC Bearings Incorporated (NASDAQ:ROLL) has experienced an increase in hedge fund sentiment in recent months. RBC Bearings Incorporated (NASDAQ:ROLL) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ROLL isn’t among the 30 most popular stocks among hedge funds (click for Q2 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. Now we’re going to take a peek at the recent hedge fund action encompassing RBC Bearings Incorporated (NASDAQ:ROLL).

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

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 144% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ROLL over the last 25 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in RBC Bearings Incorporated (NASDAQ:ROLL). Royce & Associates has a $34.5 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $33.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Joseph Samuels’s Islet Management and Highbridge Capital Management. In terms of the portfolio weights assigned to each position Pinz Capital allocated the biggest weight to RBC Bearings Incorporated (NASDAQ:ROLL), around 2.84% of its 13F portfolio. Angelo Gordon & Co is also relatively very bullish on the stock, setting aside 0.65 percent of its 13F equity portfolio to ROLL.

Now, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in RBC Bearings Incorporated (NASDAQ:ROLL). Citadel Investment Group had $33.1 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also initiated a $20.3 million position during the quarter. The other funds with brand new ROLL positions are Joseph Samuels’s Islet Management, Highbridge Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s now review hedge fund activity in other stocks similar to RBC Bearings Incorporated (NASDAQ:ROLL). These stocks are CoreSite Realty Corp (NYSE:COR), Ultragenyx Pharmaceutical Inc (NASDAQ:RARE), Amkor Technology, Inc. (NASDAQ:AMKR), STAAR Surgical Company (NASDAQ:STAA), INMODE LTD. (NASDAQ:INMD), Fox Factory Holding Corp (NASDAQ:FOXF), and Inovalon Holdings Inc (NASDAQ:INOV). This group of stocks’ market values match ROLL’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $485 million. That figure was $226 million in ROLL’s case. INMODE LTD. (NASDAQ:INMD) is the most popular stock in this table. On the other hand CoreSite Realty Corp (NYSE:COR) is the least popular one with only 15 bullish hedge fund positions. RBC Bearings Incorporated (NASDAQ:ROLL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ROLL is 65. 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 negative signal and 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately ROLL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ROLL investors were disappointed as the stock returned -4.8% since the end of September (through 12/31) 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 most of these stocks already outperformed the market in 2021.

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