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. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Re/Max Holdings Inc (NYSE:RMAX).
Is RMAX a good stock to buy now? Re/Max Holdings Inc (NYSE:RMAX) has experienced an increase in support from the world’s most elite money managers of late. Re/Max Holdings Inc (NYSE:RMAX) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 17. Our calculations also showed that RMAX 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 let’s take a gander at the latest hedge fund action surrounding Re/Max Holdings Inc (NYSE:RMAX).
Do Hedge Funds Think RMAX Is A Good Stock To Buy Now?
At the end of September, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 57% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RMAX over the last 21 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Re/Max Holdings Inc (NYSE:RMAX) was held by Renaissance Technologies, which reported holding $41.4 million worth of stock at the end of September. It was followed by Prelude Capital (previously Springbok Capital) with a $2.5 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Algert Coldiron Investors. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to Re/Max Holdings Inc (NYSE:RMAX), around 0.17% of its 13F portfolio. Prelude Capital (previously Springbok Capital) is also relatively very bullish on the stock, dishing out 0.12 percent of its 13F equity portfolio to RMAX.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in Re/Max Holdings Inc (NYSE:RMAX). Arrowstreet Capital had $2.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.8 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Noam Gottesman’s GLG Partners.
Let’s check out hedge fund activity in other stocks similar to Re/Max Holdings Inc (NYSE:RMAX). We will take a look at Inseego Corp. (NASDAQ:INSG), Adverum Biotechnologies, Inc. (NASDAQ:ADVM), New Frontier Health Corporation (NYSE:NFH), Yalla Group Limited (NYSE:YALA), Xenia Hotels & Resorts Inc (NYSE:XHR), Cornerstone Building Brands, Inc. (NYSE:CNR), and Standard Motor Products, Inc. (NYSE:SMP). All of these stocks’ market caps match RMAX’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 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $48 million in RMAX’s case. Adverum Biotechnologies, Inc. (NASDAQ:ADVM) is the most popular stock in this table. On the other hand Yalla Group Limited (NYSE:YALA) is the least popular one with only 7 bullish hedge fund positions. Re/Max Holdings Inc (NYSE:RMAX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RMAX is 37.1. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 surpassed the market again by 16.2 percentage points. Unfortunately RMAX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); RMAX investors were disappointed as the stock returned 0.5% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.