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Hedge Funds Cashing Out Of Ritchie Bros. Auctioneers Incorporated (RBA)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) based on that data.

Is Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) a buy here? Money managers are in a pessimistic mood. The number of long hedge fund bets retreated by 7 recently. Our calculations also showed that RBA 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). RBA was in 14 hedge funds’ portfolios at the end of the first quarter of 2020. There were 21 hedge funds in our database with RBA holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a lot of methods stock market investors have at their disposal to appraise publicly traded companies. Two of the most underrated methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outpace the market by a superb margin (see the details here).

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 PayPal alternatives for international payments to identify emerging companies that are likely to deliver 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind let’s take a look at the key hedge fund action surrounding Ritchie Bros. Auctioneers Incorporated (NYSE:RBA).

How are hedge funds trading Ritchie Bros. Auctioneers Incorporated (NYSE:RBA)?

Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in RBA a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), with a stake worth $80.7 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $31.7 million. D E Shaw, Two Sigma Advisors, and Balyasny Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), around 0.43% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, earmarking 0.09 percent of its 13F equity portfolio to RBA.

Seeing as Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) has experienced bearish sentiment from the smart money, we can see that there lies a certain “tier” of funds that slashed their full holdings by the end of the first quarter. Interestingly, Israel Englander’s Millennium Management said goodbye to the biggest position of the “upper crust” of funds followed by Insider Monkey, worth an estimated $20 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $12.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 7 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks similar to Ritchie Bros. Auctioneers Incorporated (NYSE:RBA). We will take a look at GrubHub Inc (NYSE:GRUB), Clearway Energy, Inc. (NYSE:CWEN), Nomad Foods Limited (NYSE:NOMD), and Exponent, Inc. (NASDAQ:EXPO). All of these stocks’ market caps are closest to RBA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GRUB 32 373032 -1
CWEN 17 169906 -6
NOMD 34 444046 -1
EXPO 17 121456 0
Average 25 277110 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $277 million. That figure was $178 million in RBA’s case. Nomad Foods Limited (NYSE:NOMD) is the most popular stock in this table. On the other hand Clearway Energy, Inc. (NYSE:CWEN) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) is even less popular than CWEN. Hedge funds dodged a bullet by taking a bearish stance towards RBA. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but managed to beat the market by 16.8 percentage points. Unfortunately RBA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); RBA investors were disappointed as the stock returned 17.1% during the second quarter (through June 25th) 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 so far in 2020.

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