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 Resources Connection, Inc. (NASDAQ:RGP).
Is RGP a good stock to buy now? The best stock pickers were turning bullish. The number of bullish hedge fund positions moved up by 2 recently. Resources Connection, Inc. (NASDAQ:RGP) was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 18. Our calculations also showed that RGP 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 21st century investor’s toolkit there are a lot of tools shareholders employ to value publicly traded companies. Some of the best tools are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outperform their index-focused peers by a superb amount (see the details here).
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. Keeping this in mind let’s analyze the recent hedge fund action regarding Resources Connection, Inc. (NASDAQ:RGP).
Do Hedge Funds Think RGP Is A Good Stock To Buy Now?
At third quarter’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RGP over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in Resources Connection, Inc. (NASDAQ:RGP), which was worth $34.1 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $3.9 million worth of shares. Arrowstreet Capital, Citadel Investment Group, and AQR Capital 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 Royce & Associates allocated the biggest weight to Resources Connection, Inc. (NASDAQ:RGP), around 0.37% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, dishing out 0.12 percent of its 13F equity portfolio to RGP.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Winton Capital Management, managed by David Harding, assembled the most valuable position in Resources Connection, Inc. (NASDAQ:RGP). Winton Capital Management had $0.6 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Thomas Bailard’s Bailard Inc, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s check out hedge fund activity in other stocks similar to Resources Connection, Inc. (NASDAQ:RGP). These stocks are TransMedics Group, Inc. (NASDAQ:TMDX), Dime Community Bancshares, Inc. (NASDAQ:DCOM), Thermon Group Holdings, Inc. (NYSE:THR), Kamada Ltd (NASDAQ:KMDA), Valhi, Inc. (NYSE:VHI), WiMi Hologram Cloud Inc. (NASDAQ:WIMI), and Wins Finance Holdings Inc. (NASDAQ:WINS). All of these stocks’ market caps are similar to RGP’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 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $47 million in RGP’s case. Thermon Group Holdings, Inc. (NYSE:THR) is the most popular stock in this table. On the other hand Wins Finance Holdings Inc. (NASDAQ:WINS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Resources Connection, Inc. (NASDAQ:RGP) is more popular among hedge funds. Our overall hedge fund sentiment score for RGP is 82. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on RGP as the stock returned 14.8% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.