In this article we will take a look at whether hedge funds think RiceBran Technologies (NASDAQ:RIBT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is RiceBran Technologies (RIBT) a good stock to buy now? Hedge fund interest in RiceBran Technologies (NASDAQ:RIBT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that RIBT 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). At the end of this article we will also compare RIBT to other stocks including Check-Cap Ltd. (NASDAQ:CHEK), Myomo Inc. (NYSE:MYO), and Equus Total Return, Inc. (NYSE:EQS) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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 view the fresh hedge fund action encompassing RiceBran Technologies (NASDAQ:RIBT).
What does smart money think about RiceBran Technologies (NASDAQ:RIBT)?
Heading into the fourth quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RIBT over the last 21 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, DG Capital Management held the most valuable stake in RiceBran Technologies (NASDAQ:RIBT), which was worth $0.9 million at the end of the third quarter. On the second spot was Roumell Asset Management which amassed $0.5 million worth of shares. Renaissance Technologies, Royce & Associates, and Citadel Investment Group 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 Roumell Asset Management allocated the biggest weight to RiceBran Technologies (NASDAQ:RIBT), around 0.99% of its 13F portfolio. DG Capital Management is also relatively very bullish on the stock, earmarking 0.53 percent of its 13F equity portfolio to RIBT.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as RiceBran Technologies (NASDAQ:RIBT) but similarly valued. We will take a look at Check-Cap Ltd. (NASDAQ:CHEK), Myomo Inc. (NYSE:MYO), Equus Total Return, Inc. (NYSE:EQS), Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF), RCM Technologies, Inc. (NASDAQ:RCMT), JAKKS Pacific, Inc. (NASDAQ:JAKK), and Sundance Energy Inc. (NASDAQ:SNDE). This group of stocks’ market caps are similar to RIBT’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 2.1 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $2 million in RIBT’s case. Equus Total Return, Inc. (NYSE:EQS) is the most popular stock in this table. On the other hand Myomo Inc. (NYSE:MYO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks RiceBran Technologies (NASDAQ:RIBT) is more popular among hedge funds. Our overall hedge fund sentiment score for RIBT is 80. 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 November 27th but still managed to beat the market by 16.1 percentage points. Hedge funds were also right about betting on RIBT as the stock returned 42.9% since the end of September (through 11/27) 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.