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Is Rambus Inc. (RMBS) A Good Stock To Buy?

At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Rambus Inc. (NASDAQ:RMBS) makes for a good investment right now.

Is Rambus Inc. (NASDAQ:RMBS) a splendid investment right now? Investors who are in the know are taking a bullish view. The number of long hedge fund bets inched up by 5 lately. RMBS was in 16 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with RMBS positions at the end of the previous quarter. At the end of this article we will also compare RMBS to other stocks including First Midwest Bancorp Inc (NASDAQ:FMBI), Pennsylvania R.E.I.T. (NYSE:PEI), and Horace Mann Educators Corporation (NYSE:HMN) to get a better sense of its popularity.

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If you’d ask most investors, hedge funds are perceived as worthless, outdated financial tools of years past. While there are over an 8000 funds with their doors open at the moment, Our researchers hone in on the leaders of this club, approximately 700 funds. Most estimates calculate that this group of people orchestrate most of all hedge funds’ total asset base, and by watching their inimitable picks, Insider Monkey has determined a number of investment strategies that have historically outrun the broader indices. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, we’re going to go over the new action regarding Rambus Inc. (NASDAQ:RMBS).

What does the smart money think about Rambus Inc. (NASDAQ:RMBS)?

At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 45% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’s Renaissance Technologies has the number one position in Rambus Inc. (NASDAQ:RMBS), worth close to $21.2 million, amounting to 0.1% of its total 13F portfolio. On Renaissance Technologies’s heels is Millennium Management, managed by Israel Englander, which holds a $16.6 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism comprise Ken Griffin’s Citadel Investment Group, Joel Greenblatt’s Gotham Asset Management and John Overdeck and David Siegel’s Two Sigma Advisors.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Rambus Inc. (NASDAQ:RMBS) headfirst. Soros Fund Management, managed by George Soros, created the biggest position in Rambus Inc. (NASDAQ:RMBS). Soros Fund Management had $1.1 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $0.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Peter Muller’s PDT Partners, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Rambus Inc. (NASDAQ:RMBS) but similarly valued. We will take a look at First Midwest Bancorp Inc (NASDAQ:FMBI), Pennsylvania R.E.I.T. (NYSE:PEI), Horace Mann Educators Corporation (NYSE:HMN), and FCB Financial Holdings Inc (NYSE:FCB). All of these stocks’ market caps match RMBS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FMBI 14 84420 1
PEI 8 22888 -4
HMN 6 51895 -1
FCB 22 201174 7

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $58 million in RMBS’s case. FCB Financial Holdings Inc (NYSE:FCB) is the most popular stock in this table. On the other hand Horace Mann Educators Corporation (NYSE:HMN) is the least popular one with only 6 bullish hedge fund positions. Rambus Inc. (NASDAQ:RMBS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal that makes RMBS worth a closer look.

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