Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Revolve Group, Inc. (NYSE:RVLV) based on that data.
Is RVLV a good stock to buy now? Revolve Group, Inc. (NYSE:RVLV) has experienced an increase in hedge fund sentiment lately. Revolve Group, Inc. (NYSE:RVLV) was in 21 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 11 hedge funds in our database with RVLV holdings at the end of June. Our calculations also showed that RVLV 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 go over the new hedge fund action encompassing Revolve Group, Inc. (NYSE:RVLV).
Do Hedge Funds Think RVLV Is A Good Stock To Buy Now?
At third quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 91% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RVLV over the last 21 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Revolve Group, Inc. (NYSE:RVLV) was held by Point72 Asset Management, which reported holding $20.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $12 million position. Other investors bullish on the company included Arrowstreet Capital, Citadel Investment Group, and Tudor Investment Corp. In terms of the portfolio weights assigned to each position Kamunting Street Capital allocated the biggest weight to Revolve Group, Inc. (NYSE:RVLV), around 0.52% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to RVLV.
Consequently, specific money managers have been driving this bullishness. Renaissance Technologies, established the largest position in Revolve Group, Inc. (NYSE:RVLV). Renaissance Technologies had $12 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $9 million position during the quarter. The other funds with brand new RVLV positions are Paul Tudor Jones’s Tudor Investment Corp, Israel Englander’s Millennium Management, and Sander Gerber’s Hudson Bay Capital Management.
Let’s go over hedge fund activity in other stocks similar to Revolve Group, Inc. (NYSE:RVLV). These stocks are First Bancorp (NYSE:FBP), CSW Industrials, Inc. (NASDAQ:CSWI), Urban Edge Properties (NYSE:UE), Banner Corporation (NASDAQ:BANR), The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), Repare Therapeutics Inc. (NASDAQ:RPTX), and Tronox Holdings Plc (NYSE:TROX). This group of stocks’ market values are similar to RVLV’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 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $79 million in RVLV’s case. First Bancorp (NYSE:FBP) is the most popular stock in this table. On the other hand Banner Corporation (NASDAQ:BANR) is the least popular one with only 14 bullish hedge fund positions. Revolve Group, Inc. (NYSE:RVLV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RVLV is 90. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on RVLV as the stock returned 47.8% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.