The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Resolute Forest Products Inc (NYSE:RFP)?
Is RFP a good stock to buy now? Prominent investors were getting more bullish. The number of bullish hedge fund bets rose by 5 in recent months. Resolute Forest Products Inc (NYSE:RFP) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 27. Our calculations also showed that RFP 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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 view the recent hedge fund action regarding Resolute Forest Products Inc (NYSE:RFP).
Do Hedge Funds Think RFP Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 63% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RFP over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Resolute Forest Products Inc (NYSE:RFP) was held by Fairfax Financial Holdings, which reported holding $136.6 million worth of stock at the end of September. It was followed by Chou Associates Management with a $19.4 million position. Other investors bullish on the company included Renaissance Technologies, Arrowstreet Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Chou Associates Management allocated the biggest weight to Resolute Forest Products Inc (NYSE:RFP), around 19.5% of its 13F portfolio. Fairfax Financial Holdings is also relatively very bullish on the stock, setting aside 7.71 percent of its 13F equity portfolio to RFP.
Consequently, key hedge funds have jumped into Resolute Forest Products Inc (NYSE:RFP) headfirst. Engineers Gate Manager, managed by Greg Eisner, created the biggest position in Resolute Forest Products Inc (NYSE:RFP). Engineers Gate Manager had $0.5 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 following funds were also among the new RFP investors: Thomas Bailard’s Bailard Inc and Jonathan Soros’s JS Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Resolute Forest Products Inc (NYSE:RFP) but similarly valued. These stocks are Chuy’s Holdings Inc (NASDAQ:CHUY), Athersys, Inc. (NASDAQ:ATHX), Immunic, Inc. (NASDAQ:IMUX), Ducommun Incorporated (NYSE:DCO), Barings BDC, Inc. (NYSE:BBDC), Central Pacific Financial Corp. (NYSE:CPF), and CHP Merger Corp. (NASDAQ:CHPM). All of these stocks’ market caps resemble RFP’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 10.9 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $170 million in RFP’s case. CHP Merger Corp. (NASDAQ:CHPM) is the most popular stock in this table. On the other hand Athersys, Inc. (NASDAQ:ATHX) is the least popular one with only 6 bullish hedge fund positions. Resolute Forest Products Inc (NYSE:RFP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RFP is 59.4. 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 RFP as the stock returned 36.8% 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.