At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards LiveRamp Holdings, Inc. (NYSE:RAMP).
LiveRamp Holdings, Inc. (NYSE:RAMP) investors should be aware of a decrease in enthusiasm from smart money lately. Our calculations also showed that RAMP 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s go over the fresh hedge fund action surrounding LiveRamp Holdings, Inc. (NYSE:RAMP).
How have hedgies been trading LiveRamp Holdings, Inc. (NYSE:RAMP)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in RAMP 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, RGM Capital was the largest shareholder of LiveRamp Holdings, Inc. (NYSE:RAMP), with a stake worth $82.3 million reported as of the end of September. Trailing RGM Capital was Citadel Investment Group, which amassed a stake valued at $14.4 million. Ancora Advisors, Whetstone Capital Advisors, and Renaissance Technologies 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 RGM Capital allocated the biggest weight to LiveRamp Holdings, Inc. (NYSE:RAMP), around 6.47% of its 13F portfolio. Berylson Capital Partners is also relatively very bullish on the stock, dishing out 3.1 percent of its 13F equity portfolio to RAMP.
Seeing as LiveRamp Holdings, Inc. (NYSE:RAMP) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of money managers who were dropping their positions entirely last quarter. At the top of the heap, Cyrus de Weck’s Portsea Asset Management sold off the biggest position of all the hedgies monitored by Insider Monkey, valued at an estimated $18.2 million in stock, and Gavin M. Abrams’s Abrams Bison Investments was right behind this move, as the fund sold off about $7.7 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to LiveRamp Holdings, Inc. (NYSE:RAMP). These stocks are Piedmont Office Realty Trust, Inc. (NYSE:PDM), 1Life Healthcare, Inc. (NASDAQ:ONEM), Bank of Hawaii Corporation (NYSE:BOH), and National Health Investors Inc (NYSE:NHI). This group of stocks’ market values are similar to RAMP’s market value.
|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 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $137 million in RAMP’s case. Bank of Hawaii Corporation (NYSE:BOH) is the most popular stock in this table. On the other hand Piedmont Office Realty Trust, Inc. (NYSE:PDM) is the least popular one with only 7 bullish hedge fund positions. LiveRamp Holdings, Inc. (NYSE:RAMP) is not the most popular stock in this group but hedge fund interest is still above average. 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 but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on RAMP as the stock returned 38.5% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.