Is Regis Corporation (NYSE:RGS) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Regis Corporation (NYSE:RGS) was in 15 hedge funds’ portfolios at the end of the first quarter of 2019. RGS has experienced an increase in support from the world’s most elite money managers in recent months. There were 12 hedge funds in our database with RGS holdings at the end of the previous quarter. Our calculations also showed that RGS isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a glance at the latest hedge fund action encompassing Regis Corporation (NYSE:RGS).
How have hedgies been trading Regis Corporation (NYSE:RGS)?
At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in RGS a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Daniel Beltzman and Gergory Smith’s Birch Run Capital has the most valuable position in Regis Corporation (NYSE:RGS), worth close to $209.6 million, corresponding to 66.6% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, managed by Jim Simons, which holds a $40.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions contain Brian Gustavson and Andrew Haley’s 1060 Capital Management, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC and D. E. Shaw’s D E Shaw.
As aggregate interest increased, key money managers were breaking ground themselves. 1060 Capital Management, managed by Brian Gustavson and Andrew Haley, assembled the largest position in Regis Corporation (NYSE:RGS). 1060 Capital Management had $12.5 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, Paul Tudor Jones’s Tudor Investment Corp, and David Harding’s Winton Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Regis Corporation (NYSE:RGS) but similarly valued. These stocks are CymaBay Therapeutics Inc (NASDAQ:CBAY), Navigant Consulting, Inc. (NYSE:NCI), Monarch Casino & Resort, Inc. (NASDAQ:MCRI), and Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX). This group of stocks’ market valuations resemble RGS’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $293 million in RGS’s case. CymaBay Therapeutics Inc (NASDAQ:CBAY) is the most popular stock in this table. On the other hand Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX) is the least popular one with only 1 bullish hedge fund positions. Regis Corporation (NYSE:RGS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately RGS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RGS were disappointed as the stock returned -7.3% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.