RCI Hospitality Holdings, Inc. (RICK) Fell Out Of Favor With Hedge Funds

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about RCI Hospitality Holdings, Inc. (NASDAQ:RICK) in this article.

RCI Hospitality Holdings, Inc. (NASDAQ:RICK) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. RICK shareholders have witnessed a decrease in hedge fund sentiment recently. There were 7 hedge funds in our database with RICK positions at the end of the second quarter. Our calculations also showed that RICK 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In the eyes of most shareholders, hedge funds are viewed as underperforming, outdated investment tools of years past. While there are over 8000 funds in operation today, We look at the bigwigs of this club, around 850 funds. These hedge fund managers orchestrate the lion’s share of the smart money’s total asset base, and by tracking their best picks, Insider Monkey has determined various investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

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 check out the key hedge fund action surrounding RCI Hospitality Holdings, Inc. (NASDAQ:RICK).

What have hedge funds been doing with RCI Hospitality Holdings, Inc. (NASDAQ:RICK)?

At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in RICK over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Adam Wyden’s ADW Capital has the number one position in RCI Hospitality Holdings, Inc. (NASDAQ:RICK), worth close to $18.6 million, amounting to 10.8% of its total 13F portfolio. Sitting at the No. 2 spot is Greenhaven Road Investment Management, led by Scott Stewart Miller, holding a $11.7 million position; the fund has 4.5% of its 13F portfolio invested in the stock. Remaining peers with similar optimism contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Harding’s Winton Capital Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position ADW Capital allocated the biggest weight to RCI Hospitality Holdings, Inc. (NASDAQ:RICK), around 10.84% of its 13F portfolio. Greenhaven Road Investment Management is also relatively very bullish on the stock, designating 4.5 percent of its 13F equity portfolio to RICK.

Judging by the fact that RCI Hospitality Holdings, Inc. (NASDAQ:RICK) has experienced a decline in interest from the smart money, it’s easy to see that there were a few hedge funds that slashed their full holdings last quarter. Interestingly, Ken Griffin’s Citadel Investment Group said goodbye to the biggest position of the 750 funds followed by Insider Monkey, totaling an estimated $0.6 million in stock. Renaissance Technologies, also said goodbye to its stock, about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as RCI Hospitality Holdings, Inc. (NASDAQ:RICK) but similarly valued. We will take a look at CompX International Inc. (NYSE:CIX), Perion Network Ltd (NASDAQ:PERI), Liquidia Corporation (NASDAQ:LQDA), Overseas Shipholding Group, Inc. (NYSE:OSG), Flexsteel Industries, Inc. (NASDAQ:FLXS), Luna Innovations Incorporated (NASDAQ:LUNA), and VOXX International Corp (NASDAQ:VOXX). All of these stocks’ market caps resemble RICK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CIX 4 12036 0
PERI 8 28654 3
LQDA 10 25209 -6
OSG 11 39199 -1
FLXS 9 40282 -4
LUNA 11 26088 1
VOXX 7 35232 1
Average 8.6 29529 -0.9

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 $30 million. That figure was $33 million in RICK’s case. Overseas Shipholding Group, Inc. (NYSE:OSG) is the most popular stock in this table. On the other hand CompX International Inc. (NYSE:CIX) is the least popular one with only 4 bullish hedge fund positions. RCI Hospitality Holdings, Inc. (NASDAQ:RICK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RICK is 23.8. 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 November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on RICK as the stock returned 38.2% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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