Hedge Funds Aren’t Crazy About Ritchie Bros. Auctioneers (USA) (RBA) Anymore

Ritchie Bros. Auctioneers (USA) (NYSE:RBA) shareholders have witnessed a decrease in enthusiasm from smart money lately.

In today’s marketplace, there are dozens of metrics shareholders can use to watch Mr. Market. Two of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best money managers can outpace the broader indices by a healthy margin (see just how much).

Chuck Royce

Just as important, positive insider trading sentiment is another way to break down the financial markets. Just as you’d expect, there are a number of incentives for an executive to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the market-beating potential of this tactic if piggybackers know where to look (learn more here).

With all of this in mind, it’s important to take a peek at the recent action regarding Ritchie Bros. Auctioneers (USA) (NYSE:RBA).

What does the smart money think about Ritchie Bros. Auctioneers (USA) (NYSE:RBA)?

Heading into 2013, a total of 6 of the hedge funds we track were long in this stock, a change of -14% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Ritchie Bros. Auctioneers (USA) (NYSE:RBA), worth close to $180.2 million, comprising 0.6% of its total 13F portfolio. Coming in second is Robert Jaffe of Force Capital, with a $11.3 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group.

Since Ritchie Bros. Auctioneers (USA) (NYSE:RBA) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies who were dropping their full holdings at the end of the year. Interestingly, Geoffrey Raynor’s Q Investments (Specter Holdings) dumped the biggest position of the 450+ funds we track, totaling an estimated $0.4 million in stock., and Joel Greenblatt of Gotham Asset Management was right behind this move, as the fund cut about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds at the end of the year.

What have insiders been doing with Ritchie Bros. Auctioneers (USA) (NYSE:RBA)?

Insider purchases made by high-level executives is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time frame, Ritchie Bros. Auctioneers (USA) (NYSE:RBA) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Ritchie Bros. Auctioneers (USA) (NYSE:RBA). These stocks are Deluxe Corporation (NYSE:DLX), Portfolio Recovery Associates, Inc. (NASDAQ:PRAA), Lender Processing Services, Inc. (NYSE:LPS), RR Donnelley & Sons Co (NASDAQ:RRD), and HMS Holdings Corp. (NASDAQ:HMSY). This group of stocks are in the business services industry and their market caps resemble RBA’s market cap.