Is RTI Surgical Holdings, Inc. (RTIX) Going to Burn These Hedge Funds?

We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article, we look at what those funds think of RTI Surgical Holdings, Inc. (NASDAQ:RTIX) based on that data.

Is RTI Surgical Holdings, Inc. (NASDAQ:RTIX) a healthy stock for your portfolio? Prominent investors are becoming less hopeful. The number of long hedge fund bets were cut by 2 in recent months. Our calculations also showed that RTIX isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s review the fresh hedge fund action surrounding RTI Surgical Holdings, Inc. (NASDAQ:RTIX).

How have hedgies been trading RTI Surgical Holdings, Inc. (NASDAQ:RTIX)?

Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the first quarter of 2019. By comparison, 12 hedge funds held shares or bullish call options in RTIX 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.

Kris Jenner - Rock Springs Capital

When looking at the institutional investors followed by Insider Monkey, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management has the largest position in RTI Surgical Holdings, Inc. (NASDAQ:RTIX), worth close to $8.3 million, accounting for 0.3% of its total 13F portfolio. On Rock Springs Capital Management’s heels is Renaissance Technologies, with a $6.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions encompass D. E. Shaw’s D E Shaw, Peter Schliemann’s Rutabaga Capital Management and Chuck Royce’s Royce & Associates.

Due to the fact that RTI Surgical Holdings, Inc. (NASDAQ:RTIX) has faced falling interest from hedge fund managers, it’s safe to say that there exists a select few money managers that slashed their full holdings in the second quarter. Intriguingly, Israel Englander’s Millennium Management dropped the largest investment of all the hedgies watched by Insider Monkey, totaling about $0.3 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund said goodbye to about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds in the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as RTI Surgical Holdings, Inc. (NASDAQ:RTIX) but similarly valued. We will take a look at Denison Mines Corp (NYSE:DNN), Spirit of Texas Bancshares, Inc. (NASDAQ:STXB), Genie Energy Ltd (NYSE:GNE), and Jumei International Holding Ltd (NYSE:JMEI). This group of stocks’ market valuations are similar to RTIX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DNN 4 1703 0
STXB 1 580 0
GNE 10 13157 1
JMEI 6 10108 3
Average 5.25 6387 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $29 million in RTIX’s case. Genie Energy Ltd (NYSE:GNE) is the most popular stock in this table. On the other hand Spirit of Texas Bancshares, Inc. (NASDAQ:STXB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks RTI Surgical Holdings, Inc. (NASDAQ:RTIX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately RTIX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RTIX were disappointed as the stock returned -32.9% during the third quarter 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 many of these stocks already outperformed the market in Q3.

Disclosure: None. This article was originally published at Insider Monkey.