Hedge Funds Are Souring On Radiant Logistics, Inc. (RLGT)

The latest 13F reporting period has come and gone, and 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. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtRadiant Logistics, Inc. (NYSE:RLGT) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Radiant Logistics, Inc. (NYSE:RLGT) a buy right now? Prominent investors were getting less optimistic. The number of bullish hedge fund bets shrunk by 2 in recent months. Our calculations also showed that RLGT 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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.

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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. Keeping this in mind we’re going to take a gander at the recent hedge fund action encompassing Radiant Logistics, Inc. (NYSE:RLGT).

How are hedge funds trading Radiant Logistics, Inc. (NYSE:RLGT)?

At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in RLGT over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is RLGT A Good Stock To Buy?

The largest stake in Radiant Logistics, Inc. (NYSE:RLGT) was held by Ancora Advisors, which reported holding $2.7 million worth of stock at the end of September. It was followed by Venator Capital Management with a $2.4 million position. Other investors bullish on the company included Two Sigma Advisors, Arrowstreet Capital, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Venator Capital Management allocated the biggest weight to Radiant Logistics, Inc. (NYSE:RLGT), around 2.46% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, earmarking 0.13 percent of its 13F equity portfolio to RLGT.

Due to the fact that Radiant Logistics, Inc. (NYSE:RLGT) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few fund managers that elected to cut their positions entirely last quarter. Intriguingly, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors dumped the biggest position of the 750 funds monitored by Insider Monkey, totaling close to $0.3 million in stock. Israel Englander’s fund, Millennium Management, also cut its stock, about $0.1 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Radiant Logistics, Inc. (NYSE:RLGT). These stocks are Protagonist Therapeutics, Inc. (NASDAQ:PTGX), Recro Pharma Inc (NASDAQ:REPH), Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC), and ORBCOMM Inc (NASDAQ:ORBC). All of these stocks’ market caps match RLGT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PTGX 15 48172 -2
REPH 11 40930 -6
NGVC 9 15433 -1
ORBC 18 43349 1
Average 13.25 36971 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $7 million in RLGT’s case. ORBCOMM Inc (NASDAQ:ORBC) is the most popular stock in this table. On the other hand Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) is the least popular one with only 9 bullish hedge fund positions. Radiant Logistics, Inc. (NYSE:RLGT) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately RLGT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); RLGT investors were disappointed as the stock returned 1.6% during the second quarter 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.

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