Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Rocky Brands, Inc. (NASDAQ:RCKY)? The smart money sentiment can provide an answer to this question.
Is Rocky Brands (RCKY) a good stock to buy now? RCKY was in 8 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. RCKY investors should pay attention to an increase in support from the world’s most elite money managers in recent months. There were 7 hedge funds in our database with RCKY positions at the end of the second quarter. Our calculations also showed that RCKY 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.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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 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 take a gander at the latest hedge fund action regarding Rocky Brands, Inc. (NASDAQ:RCKY).
Hedge fund activity in Rocky Brands, Inc. (NASDAQ:RCKY)
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RCKY over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Rocky Brands, Inc. (NASDAQ:RCKY), with a stake worth $8.9 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $2.2 million. GLG Partners, Winton Capital Management, and Two Sigma Advisors 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 Winton Capital Management allocated the biggest weight to Rocky Brands, Inc. (NASDAQ:RCKY), around 0.02% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to RCKY.
Now, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in Rocky Brands, Inc. (NASDAQ:RCKY). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) also initiated a $0 million position during the quarter.
Let’s also examine hedge fund activity in other stocks similar to Rocky Brands, Inc. (NASDAQ:RCKY). These stocks are SuRo Capital Corp. (NASDAQ:SSSS), Spok Holdings Inc (NASDAQ:SPOK), Exfo Inc (NASDAQ:EXFO), ACNB Corporation (NASDAQ:ACNB), Avenue Therapeutics, Inc. (NASDAQ:ATXI), Checkpoint Therapeutics, Inc. (NASDAQ:CKPT), and Milestone Pharmaceuticals Inc. (NASDAQ:MIST). All of these stocks’ market caps match RCKY’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 5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $14 million in RCKY’s case. Spok Holdings Inc (NASDAQ:SPOK) is the most popular stock in this table. On the other hand Exfo Inc (NASDAQ:EXFO) is the least popular one with only 1 bullish hedge fund positions. Rocky Brands, Inc. (NASDAQ:RCKY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RCKY is 52.9. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on RCKY as the stock returned 19% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.