Is Ruhnn Holding Limited (NASDAQ:RUHN) 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 Ruhnn Holding Limited (NASDAQ:RUHN) the right pick for your portfolio? The best stock pickers were in an optimistic mood. The number of bullish hedge fund bets moved up by 1 in recent months. Ruhnn Holding Limited (NASDAQ:RUHN) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 2. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RUHN 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely 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 10 most profitable companies in the world 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. Now let’s take a look at the key hedge fund action surrounding Ruhnn Holding Limited (NASDAQ:RUHN).
What does smart money think about Ruhnn Holding Limited (NASDAQ:RUHN)?
At third quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RUHN over the last 21 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Ruhnn Holding Limited (NASDAQ:RUHN), which was worth $0.5 million at the end of the third quarter. On the second spot was Millennium Management which amassed $0.1 million worth of shares. Paloma Partners was 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 Paloma Partners allocated the biggest weight to Ruhnn Holding Limited (NASDAQ:RUHN), around 0.0012% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0005 percent of its 13F equity portfolio to RUHN.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Paloma Partners, managed by Donald Sussman, assembled the most valuable position in Ruhnn Holding Limited (NASDAQ:RUHN). Paloma Partners had $0 million invested in the company at the end of the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ruhnn Holding Limited (NASDAQ:RUHN) but similarly valued. We will take a look at GreenPower Motor Company Inc. (NASDAQ:GP), Matrix Service Co (NASDAQ:MTRX), NN, Inc. (NASDAQ:NNBR), Retractable Technologies, Inc. (NYSE:RVP), Tuscan Holdings Corp. II (NASDAQ:THCA), Regis Corporation (NYSE:RGS), and QEP Resources Inc (NYSE:QEP). This group of stocks’ market values are closest to RUHN’s market value.
|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 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $1 million in RUHN’s case. Matrix Service Co (NASDAQ:MTRX) is the most popular stock in this table. On the other hand GreenPower Motor Company Inc. (NASDAQ:GP) is the least popular one with only 2 bullish hedge fund positions. Ruhnn Holding Limited (NASDAQ:RUHN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RUHN is 40.2. 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 28.1% in 2020 through November 23rd and surpassed the market again by 15.4 percentage points. Unfortunately RUHN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); RUHN investors were disappointed as the stock returned 1.1% since the end of September (through 11/23) 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.