Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Retail Opportunity Investments Corp (NASDAQ:ROIC) to find out whether it was one of their high conviction long-term ideas.
Retail Opportunity Investments Corp (NASDAQ:ROIC) was in 12 hedge funds’ portfolios at the end of the third quarter of 2015. ROIC has seen an increase in hedge fund sentiment of late. There were 10 hedge funds in our database with ROIC holdings at the end of the previous quarter. At the end of this article we will also compare ROIC to other stocks including Simpson Manufacturing Co, Inc. (NYSE:SSD), Alliance Resource Partners, L.P. (NASDAQ:ARLP), and Hillenbrand, Inc. (NYSE:HI) to get a better sense of its popularity.
In the eyes of most stock holders, hedge funds are seen as worthless, old financial tools of years past. While there are more than 8000 funds trading at the moment, Our experts hone in on the elite of this club, around 700 funds. These investment experts shepherd the majority of all hedge funds’ total asset base, and by tracking their first-class equity investments, Insider Monkey has unearthed a number of investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, let’s view the fresh action regarding Retail Opportunity Investments Corp (NASDAQ:ROIC).
What does the smart money think about Retail Opportunity Investments Corp (NASDAQ:ROIC)?
Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, AEW Capital Management, managed by Jeffrey Furber, holds the biggest position in Retail Opportunity Investments Corp (NASDAQ:ROIC). AEW Capital Management has a $37.7 million position in the stock, comprising 0.9% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $26.3 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that are bullish contain J. Alan Reid, Jr.’s Forward Management, Ken Griffin’s Citadel Investment Group and Daniel Beltzman and Gergory Smith’s Birch Run Capital.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Retail Opportunity Investments Corp (NASDAQ:ROIC) headfirst. PDT Partners, managed by Peter Muller, initiated the largest position in Retail Opportunity Investments Corp (NASDAQ:ROIC). PDT Partners had $1.3 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is D. E. Shaw’s D E Shaw.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Retail Opportunity Investments Corp (NASDAQ:ROIC) but similarly valued. We will take a look at Simpson Manufacturing Co, Inc. (NYSE:SSD), Alliance Resource Partners, L.P. (NASDAQ:ARLP), Hillenbrand, Inc. (NYSE:HI), and New York REIT Inc (NYSE:NYRT). This group of stocks’ market values resemble ROIC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $80 million, slightly below than $97 million in ROIC’s case. Hillenbrand, Inc. (NYSE:HI) is the most popular stock in this table. On the other hand, Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the least popular one with only 5 bullish hedge fund positions. Retail Opportunity Investments Corp (NASDAQ:ROIC) 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. In this regard HI might be a better candidate to consider a long position.