Rush Enterprises, Inc. (RUSHA): Are Hedge Funds Right About This Stock?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Rush Enterprises, Inc. (NASDAQ:RUSHA) a bargain? The smart money is taking a bullish view. The number of bullish hedge fund positions grew by 1 in recent months. There were 10 hedge funds in our database with RUSHA positions at the end of the previous quarter. 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 Windstream Corporation (NASDAQ:WIN), Employers Holdings, Inc. (NYSE:EIG), and Meritor Inc (NYSE:MTOR) to gather more data points.

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Keeping this in mind, let’s take a gander at the key action surrounding Rush Enterprises, Inc. (NASDAQ:RUSHA).

What have hedge funds been doing with Rush Enterprises, Inc. (NASDAQ:RUSHA)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RUSHA over the last 5 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Ancient Art (Teton Capital), led by Quincy Lee, holds the number one position in Rush Enterprises, Inc. (NASDAQ:RUSHA). Ancient Art (Teton Capital) has a $27.9 million position in the stock, comprising 5.1% of its 13F portfolio. On Ancient Art (Teton Capital)’s heels is Magnolia Capital Fund, led by Adam Peterson, holding a $24.5 million position; 13.5% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish encompass Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Prescott Group Capital Management and Millennium Management, one of the biggest hedge funds in the world. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, key money managers were breaking ground themselves. Citadel Investment Group, led by Ken Griffin, created the biggest position in Rush Enterprises, Inc. (NASDAQ:RUSHA). Citadel Investment Group had $0.5 million invested in the company at the end of the quarter. Clinton Group also made a $0.2 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Rush Enterprises, Inc. (NASDAQ:RUSHA) but similarly valued. We will take a look at Windstream Corporation (NASDAQ:WIN), Employers Holdings, Inc. (NYSE:EIG), Meritor Inc (NYSE:MTOR), and Monmouth R.E. Inv. Corp. (NYSE:MNR). This group of stocks’ market values match RUSHA’s market value.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $77 million in RUSHA’s case. Meritor Inc (NYSE:MTOR) is the most popular stock in this table. On the other hand Monmouth R.E. Inv. Corp. (NYSE:MNR) is the least popular one with only 9 bullish hedge fund positions. Rush Enterprises, Inc. (NASDAQ:RUSHA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MTOR might be a better candidate to consider taking a long position in.