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Hedge Funds Coming Back To Rogers Communications Inc. (RCI)

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 Rogers Communications Inc. (NYSE:RCI) based on that data.

Rogers Communications Inc. (NYSE:RCI) was in 16 hedge funds’ portfolios at the end of March. RCI investors should pay attention to an increase in hedge fund sentiment in recent months. There were 13 hedge funds in our database with RCI holdings at the end of the previous quarter. Our calculations also showed that RCI 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

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 largest producers of bauxite to identify emerging trends that are likely to lead to 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. Keeping this in mind we’re going to analyze the latest hedge fund action encompassing Rogers Communications Inc. (NYSE:RCI).

What have hedge funds been doing with Rogers Communications Inc. (NYSE:RCI)?

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in RCI a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Rogers Communications Inc. (NYSE:RCI), with a stake worth $145 million reported as of the end of September. Trailing Renaissance Technologies was Galibier Capital Management, which amassed a stake valued at $24.4 million. GAMCO Investors, GLG Partners, and Millennium 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 Galibier Capital Management allocated the biggest weight to Rogers Communications Inc. (NYSE:RCI), around 10.62% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.23 percent of its 13F equity portfolio to RCI.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most outsized position in Rogers Communications Inc. (NYSE:RCI). Arrowstreet Capital had $6.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new RCI investors: Minhua Zhang’s Weld Capital Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Donald Sussman’s Paloma Partners.

Let’s go over hedge fund activity in other stocks similar to Rogers Communications Inc. (NYSE:RCI). These stocks are Microchip Technology Incorporated (NASDAQ:MCHP), Telefonica Brasil SA (NYSE:VIV), Canadian Natural Resources Limited (NYSE:CNQ), and Yum China Holdings, Inc. (NYSE:YUMC). This group of stocks’ market caps match RCI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MCHP 38 751411 -8
VIV 8 79400 -4
CNQ 26 107018 -3
YUMC 24 721412 -5
Average 24 414810 -5

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $415 million. That figure was $237 million in RCI’s case. Microchip Technology Incorporated (NASDAQ:MCHP) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 8 bullish hedge fund positions. Rogers Communications Inc. (NYSE:RCI) 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 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately RCI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); RCI investors were disappointed as the stock returned -1.5% 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.