Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Hedge fund interest in RPX Corp (NASDAQ:RPXC) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Meridian Bancorp, Inc. (NASDAQ:EBSB), Lakeland Financial Corporation (NASDAQ:LKFN), and Ethan Allen Interiors Inc. (NYSE:ETH) to gather more data points.
Follow Rpx Corp (NASDAQ:RPXC)
Follow Rpx Corp (NASDAQ:RPXC)
In the financial world, there are tons of formulas stock market investors can use to evaluate publicly traded companies. A duo of the best formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can beat the S&P 500 by a solid amount (see the details here).
Keeping this in mind, let’s take a gander at the key action encompassing RPX Corp (NASDAQ:RPXC).
What have hedge funds been doing with RPX Corp (NASDAQ:RPXC)?
At the end of September, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, flat over the previous quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the most valuable position in RPX Corp (NASDAQ:RPXC), worth close to $15.3 million, comprising less than 0.1% of its total 13F portfolio. On Renaissance Technologies’s heels is D E Shaw, with a $12.3 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish consist of Chuck Royce’s Royce & Associates, Joel Greenblatt’s Gotham Asset Management, and Nathaniel August’s Mangrove Partners.
Judging by the fact that RPX Corp (NASDAQ:RPXC) has faced a bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds who were dropping their full holdings last quarter. It’s worth mentioning that Mike Vranos’s Ellington cut the biggest position of all the hedgies followed by Insider Monkey, valued at close to $0.5 million in stock. Chao Ku’s fund, Nine Chapters Capital Management, also dumped its stock, about $0.3 million worth of shares. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to RPX Corp (NASDAQ:RPXC). We will take a look at Meridian Bancorp, Inc. (NASDAQ:EBSB), Lakeland Financial Corporation (NASDAQ:LKFN), Ethan Allen Interiors Inc. (NYSE:ETH), and Radware Ltd. (NASDAQ:RDWR). This group of stocks’ market values is similar to RPX Corp (NASDAQ:RPXC)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EBSB | 16 | 130962 | 0 |
| LKFN | 4 | 4471 | 0 |
| ETH | 17 | 182736 | 4 |
| RDWR | 21 | 159645 | -1 |
As you can see, these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $61 million in RPX Corp (NASDAQ:RPXC)’s case. Radware Ltd. (NASDAQ:RDWR) is the most popular stock in this table. On the other hand, Lakeland Financial Corporation (NASDAQ:LKFN) is the least popular one with only 4 bullish hedge fund positions. RPX Corp (NASDAQ:RPXC) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Radware Ltd. (NASDAQ:RDWR) might be a better candidate to consider a long position.
