Is Renasant Corporation (NASDAQ:RNST) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is RNST a good stock to buy now? The smart money was getting less bullish. The number of long hedge fund bets were cut by 1 lately. Renasant Corporation (NASDAQ:RNST) was in 9 hedge funds’ portfolios at the end of September. The all time high for this statistics is 17. Our calculations also showed that RNST 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). There were 10 hedge funds in our database with RNST holdings at the end of June.
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. Keeping this in mind let’s go over the new hedge fund action regarding Renasant Corporation (NASDAQ:RNST).
Do Hedge Funds Think RNST Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RNST 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).
The largest stake in Renasant Corporation (NASDAQ:RNST) was held by Millennium Management, which reported holding $6.8 million worth of stock at the end of September. It was followed by Forest Hill Capital with a $5.6 million position. Other investors bullish on the company included Balyasny Asset Management, Mendon Capital Advisors, and ExodusPoint Capital. In terms of the portfolio weights assigned to each position Forest Hill Capital allocated the biggest weight to Renasant Corporation (NASDAQ:RNST), around 2.54% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, earmarking 0.99 percent of its 13F equity portfolio to RNST.
Since Renasant Corporation (NASDAQ:RNST) has experienced bearish sentiment from the smart money, it’s easy to see that there is a sect of funds who sold off their full holdings in the third quarter. Intriguingly, Renaissance Technologies cut the largest position of the 750 funds monitored by Insider Monkey, totaling about $2.5 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dropped about $0.7 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Renasant Corporation (NASDAQ:RNST). These stocks are Mersana Therapeutics, Inc. (NASDAQ:MRSN), Beam Therapeutics Inc. (NASDAQ:BEAM), Adtalem Global Education Inc. (NYSE:ATGE), Black Stone Minerals LP (NYSE:BSM), The RealReal, Inc. (NASDAQ:REAL), Myovant Sciences Ltd. (NYSE:MYOV), and Silvercorp Metals Inc. (NYSE:SVM). All of these stocks’ market caps match RNST’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $20 million in RNST’s case. Mersana Therapeutics, Inc. (NASDAQ:MRSN) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 4 bullish hedge fund positions. Renasant Corporation (NASDAQ:RNST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RNST is 30.3. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on RNST as the stock returned 46.9% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.