The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Rimini Street, Inc. (NASDAQ:RMNI) based on those filings.
Is Rimini Street, Inc. (NASDAQ:RMNI) an excellent investment today? Investors who are in the know are reducing their bets on the stock. The number of bullish hedge fund bets shrunk by 2 in recent months. Our calculations also showed that RMNI isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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 leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the new hedge fund action surrounding Rimini Street, Inc. (NASDAQ:RMNI).
How have hedgies been trading Rimini Street, Inc. (NASDAQ:RMNI)?
Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from the previous quarter. By comparison, 4 hedge funds held shares or bullish call options in RMNI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Rimini Street, Inc. (NASDAQ:RMNI) was held by Adams Street Partners, which reported holding $113.6 million worth of stock at the end of September. It was followed by Nokomis Capital with a $6.5 million position. Other investors bullish on the company included Voss Capital, Cannell Capital, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Adams Street Partners allocated the biggest weight to Rimini Street, Inc. (NASDAQ:RMNI), around 28.34% of its 13F portfolio. Voss Capital is also relatively very bullish on the stock, earmarking 7.45 percent of its 13F equity portfolio to RMNI.
Seeing as Rimini Street, Inc. (NASDAQ:RMNI) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of funds that slashed their entire stakes in the first quarter. Interestingly, Michael Blitzer’s Kingstown Capital Management dropped the largest position of the 750 funds watched by Insider Monkey, worth about $3.5 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Rimini Street, Inc. (NASDAQ:RMNI) but similarly valued. We will take a look at Newtek Business Services Corp (NASDAQ:NEWT), Citizens & Northern Corporation (NASDAQ:CZNC), Marine Products Corp. (NYSE:MPX), and FLEX LNG Ltd. (NYSE:FLNG). This group of stocks’ market valuations match RMNI’s market valuation.
|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 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $132 million in RMNI’s case. Newtek Business Services Corp (NASDAQ:NEWT) is the most popular stock in this table. On the other hand FLEX LNG Ltd. (NYSE:FLNG) is the least popular one with only 1 bullish hedge fund positions. Rimini Street, Inc. (NASDAQ:RMNI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately RMNI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RMNI were disappointed as the stock returned 10.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.