Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Regal Beloit Corporation (NYSE:RBC) based on that data.
Regal Beloit Corporation (NYSE:RBC) has experienced an increase in support from the world’s most elite money managers lately. Regal Beloit Corporation (NYSE:RBC) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RBC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Sander Gerber of Hudson Bay Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a look at the key hedge fund action encompassing Regal Beloit Corporation (NYSE:RBC).
Do Hedge Funds Think RBC Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RBC over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Regal Beloit Corporation (NYSE:RBC) was held by Fisher Asset Management, which reported holding $77.4 million worth of stock at the end of December. It was followed by AQR Capital Management with a $58.3 million position. Other investors bullish on the company included Citadel Investment Group, Scopia Capital, and Scopus Asset Management. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to Regal Beloit Corporation (NYSE:RBC), around 6.18% of its 13F portfolio. Brant Point Investment Management is also relatively very bullish on the stock, earmarking 1.3 percent of its 13F equity portfolio to RBC.
As industrywide interest jumped, some big names have been driving this bullishness. Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, established the biggest position in Regal Beloit Corporation (NYSE:RBC). Scopia Capital had $49.8 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also initiated a $17.4 million position during the quarter. The following funds were also among the new RBC investors: Phill Gross and Robert Atchinson’s Adage Capital Management, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Sander Gerber’s Hudson Bay Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Regal Beloit Corporation (NYSE:RBC) but similarly valued. These stocks are Shoals Technologies Group, Inc. (NASDAQ:SHLS), Inspire Medical Systems, Inc. (NYSE:INSP), Amkor Technology, Inc. (NASDAQ:AMKR), OneConnect Financial Technology Co., Ltd. (NYSE:OCFT), Healthequity Inc (NASDAQ:HQY), TFS Financial Corporation (NASDAQ:TFSL), and Lemonade, Inc. (NYSE:LMND). This group of stocks’ market valuations match RBC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHLS | 22 | 323958 | 22 |
| INSP | 28 | 431163 | 1 |
| AMKR | 20 | 172121 | -4 |
| OCFT | 10 | 70885 | 5 |
| HQY | 18 | 221317 | -2 |
| TFSL | 6 | 145686 | -4 |
| LMND | 16 | 159616 | 3 |
| Average | 17.1 | 217821 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $359 million in RBC’s case. Inspire Medical Systems, Inc. (NYSE:INSP) is the most popular stock in this table. On the other hand TFS Financial Corporation (NASDAQ:TFSL) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Regal Beloit Corporation (NYSE:RBC) is more popular among hedge funds. Our overall hedge fund sentiment score for RBC is 90. 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. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately RBC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RBC were disappointed as the stock returned -6.4% since the end of the first quarter (through 7/2) 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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
