In this article we will check out the progression of hedge fund sentiment towards Rocket Companies, Inc. (NYSE:RKT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is RKT a good stock to buy now? Prominent investors were taking a bullish view. The number of long hedge fund positions advanced by 22 lately. Rocket Companies, Inc. (NYSE:RKT) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that RKT 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.
According to most traders, hedge funds are perceived as unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, Our experts hone in on the top tier of this club, around 850 funds. These investment experts orchestrate the majority of the hedge fund industry’s total asset base, and by tailing their unrivaled investments, Insider Monkey has unsheathed numerous investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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. With all of this in mind we’re going to analyze the new hedge fund action regarding Rocket Companies, Inc. (NYSE:RKT).
Do Hedge Funds Think RKT Is A Good Stock To Buy Now?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in RKT 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.
The largest stake in Rocket Companies, Inc. (NYSE:RKT) was held by Miller Value Partners, which reported holding $44.6 million worth of stock at the end of September. It was followed by Tremblant Capital with a $43.2 million position. Other investors bullish on the company included Samlyn Capital, Citadel Investment Group, and Adage Capital Management. In terms of the portfolio weights assigned to each position Nishkama Capital allocated the biggest weight to Rocket Companies, Inc. (NYSE:RKT), around 4.69% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, designating 2.68 percent of its 13F equity portfolio to RKT.
As industrywide interest jumped, key money managers have been driving this bullishness. Miller Value Partners, managed by Bill Miller, assembled the largest position in Rocket Companies, Inc. (NYSE:RKT). Miller Value Partners had $44.6 million invested in the company at the end of the quarter. Brett Barakett’s Tremblant Capital also made a $43.2 million investment in the stock during the quarter. The following funds were also among the new RKT investors: Robert Pohly’s Samlyn Capital, Ken Griffin’s Citadel Investment Group, and Phill Gross and Robert Atchinson’s Adage Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Rocket Companies, Inc. (NYSE:RKT). These stocks are UBS Group AG (NYSE:UBS), DocuSign, Inc. (NASDAQ:DOCU), General Dynamics Corporation (NYSE:GD), Thomson Reuters Corporation (NYSE:TRI), TC Energy Corporation (NYSE:TRP), DexCom, Inc. (NASDAQ:DXCM), and Emerson Electric Co. (NYSE:EMR). All of these stocks’ market caps match RKT’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 35 hedge funds with bullish positions and the average amount invested in these stocks was $1640 million. That figure was $319 million in RKT’s case. DocuSign, Inc. (NASDAQ:DOCU) is the most popular stock in this table. On the other hand TC Energy Corporation (NYSE:TRP) is the least popular one with only 16 bullish hedge fund positions. Rocket Companies, Inc. (NYSE:RKT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RKT is 20.4. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on RKT as the stock returned 10.1% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Follow Rocket Companies Inc. (NYSE:RKT)
Follow Rocket Companies Inc. (NYSE:RKT)
Disclosure: None. This article was originally published at Insider Monkey.