Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is REX American Resources Corp (NYSE:REX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is REX a good stock to buy now? REX American Resources Corp (NYSE:REX) has experienced an increase in hedge fund sentiment lately. REX American Resources Corp (NYSE:REX) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 9 hedge funds in our database with REX positions at the end of the second quarter. Our calculations also showed that REX isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to take a look at the latest hedge fund action surrounding REX American Resources Corp (NYSE:REX).
Do Hedge Funds Think REX Is A Good Stock To Buy Now?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the second quarter of 2020. By comparison, 9 hedge funds held shares or bullish call options in REX 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.
Among these funds, Renaissance Technologies held the most valuable stake in REX American Resources Corp (NYSE:REX), which was worth $28.7 million at the end of the third quarter. On the second spot was Portolan Capital Management which amassed $4.8 million worth of shares. Winton Capital Management, Arrowstreet Capital, and Millennium Management 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 Portolan Capital Management allocated the biggest weight to REX American Resources Corp (NYSE:REX), around 0.54% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to REX.
As one would reasonably expect, key money managers have jumped into REX American Resources Corp (NYSE:REX) headfirst. Portolan Capital Management, managed by George McCabe, initiated the largest position in REX American Resources Corp (NYSE:REX). Portolan Capital Management had $4.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as REX American Resources Corp (NYSE:REX) but similarly valued. These stocks are Laird Superfood, Inc. (NYSE:LSF), Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), BeyondSpring, Inc. (NASDAQ:BYSI), Sierra Wireless, Inc. (NASDAQ:SWIR), Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), Organogenesis Holdings Inc. (NASDAQ:ORGO), and Rubius Therapeutics, Inc. (NASDAQ:RUBY). This group of stocks’ market caps are closest to REX’s market cap.
|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 9.1 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $38 million in REX’s case. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is the most popular stock in this table. On the other hand Organogenesis Holdings Inc. (NASDAQ:ORGO) is the least popular one with only 2 bullish hedge fund positions. REX American Resources Corp (NYSE:REX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for REX is 62. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on REX as the stock returned 39.1% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.