Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Renewable Energy Group Inc (NASDAQ:REGI) was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. Renewable Energy Group Inc (NASDAQ:REGI) shareholders have witnessed a decrease in hedge fund sentiment of late. There were 15 hedge funds in our database with Renewable Energy Group Inc (NASDAQ:REGI) holdings at the end of the previous quarter. It may not come as a surprise, as the shares of the company were down 28.37% during the quarter, aligning with the hedge fund sentiment.
In order to find out more about the hedge fund behavior, we will also compare Renewable Energy Group Inc (NASDAQ:REGI) to other stocks, including Park Electrochemical Corp. (NYSE:PKE), Gain Capital Holdings Inc (NYSE:GCAP), and Clifton Bancorp, Inc. (NASDAQ:CSBK) to get a better sense of its popularity.
Follow Renewable Energy Group Inc. (NASDAQ:REGI)
Follow Renewable Energy Group Inc. (NASDAQ:REGI)
In the 21st century investor’s toolkit, there are a multitude of tools stock traders use to grade publicly traded companies. Two of the most under-the-radar tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform their index-focused peers by a superb amount (see the details here).
Keeping this in mind, let’s review the latest action regarding Renewable Energy Group Inc (NASDAQ:REGI).
How have hedgies been trading Renewable Energy Group Inc (NASDAQ:REGI)?
Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 33% from the previous quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Carlson Capital, managed by Clint Carlson, holds the biggest position in Renewable Energy Group Inc (NASDAQ:REGI). Carlson Capital has a $35.2 million position in the stock, comprising 0.4% of its 13F portfolio. On Carlson Capital’s heels is Steve Cohen of Point72 Asset Management, with a $4.4 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of Dmitry Balyasny’s Balyasny Asset Management, D E Shaw, and John Overdeck and David Siegel’s Two Sigma Advisors.
Due to the fact that Renewable Energy Group Inc (NASDAQ:REGI) has witnessed a falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that slashed their positions entirely heading into Q4. Interestingly, Richard Driehaus’ Driehaus Capital dumped the biggest stake of the 700 funds tracked by Insider Monkey, totaling an estimated $3.2 million in stock, and Howard Marks’s Oaktree Capital Management was right behind this move, as the fund sold off about $1.4 million worth of shares. These transactions are important to note, as aggregate hedge fund interest fell by 5 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Renewable Energy Group Inc (NASDAQ:REGI). These stocks are Park Electrochemical Corp. (NYSE:PKE), Gain Capital Holdings Inc (NYSE:GCAP), Clifton Bancorp, Inc. (NASDAQ:CSBK), and Sun Bancorp, Inc. /NJ (NASDAQ:SNBC). All of these stocks’ market caps are similar to Renewable Energy Group Inc (NASDAQ:REGI)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PKE | 7 | 70281 | -3 |
| GCAP | 17 | 48092 | 1 |
| CSBK | 11 | 44743 | 0 |
| SNBC | 5 | 105104 | 0 |
As you can see, these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $47 million in Renewable Energy Group Inc (NASDAQ:REGI)’s case. Gain Capital Holdings Inc (NYSE:GCAP) is the most popular stock in this table. On the other hand, Sun Bancorp, Inc. /NJ (NASDAQ:SNBC) is the least popular one with only 5 bullish hedge fund positions. Renewable Energy Group Inc (NASDAQ:REGI) 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, Gain Capital Holdings Inc (NYSE:GCAP) might be a better candidate to consider a long position.
