Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Riverview Financial Corporation (NASDAQ:RIVE).
Riverview Financial Corporation (NASDAQ:RIVE) has experienced an increase in support from the world’s most elite money managers of late. Riverview Financial Corporation (NASDAQ:RIVE) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. There were 4 hedge funds in our database with RIVE holdings at the end of June. Our calculations also showed that RIVE 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.
Emanuel Friedman of EJF 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 we’re going to take a peek at the key hedge fund action encompassing Riverview Financial Corporation (NASDAQ:RIVE).
What does smart money think about Riverview Financial Corporation (NASDAQ:RIVE)?
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in RIVE a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, EJF Capital, managed by Emanuel J. Friedman, holds the biggest position in Riverview Financial Corporation (NASDAQ:RIVE). EJF Capital has a $2.8 million position in the stock, comprising 0.2% of its 13F portfolio. On EJF Capital’s heels is Tontine Asset Management, managed by Jeffrey Gendell, which holds a $1.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish consist of Israel Englander’s Millennium Management, David P. Cohen’s Minerva Advisors and Renaissance Technologies. In terms of the portfolio weights assigned to each position Tontine Asset Management allocated the biggest weight to Riverview Financial Corporation (NASDAQ:RIVE), around 0.33% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, dishing out 0.25 percent of its 13F equity portfolio to RIVE.
As one would reasonably expect, specific money managers have been driving this bullishness. Renaissance Technologies, created the biggest position in Riverview Financial Corporation (NASDAQ:RIVE). Renaissance Technologies had $0.1 million invested in the company at the end of the quarter.
Let’s now review hedge fund activity in other stocks similar to Riverview Financial Corporation (NASDAQ:RIVE). These stocks are Golden Minerals Co (NYSE:AUMN), Qumu Corp (NASDAQ:QUMU), Zomedica Corp. (NYSE:ZOM), Medallion Financial Corp. (NASDAQ:MFIN), Scully Royalty Ltd. (NYSE:SRL), Oramed Pharmaceuticals Inc. (NASDAQ:ORMP), and Garrison Capital Inc (NASDAQ:GARS). This group of stocks’ market values match RIVE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AUMN | 1 | 464 | 0 |
| QUMU | 4 | 10731 | 1 |
| ZOM | 4 | 572 | 2 |
| MFIN | 6 | 4169 | -2 |
| SRL | 2 | 4086 | 0 |
| ORMP | 7 | 1819 | 3 |
| GARS | 5 | 5684 | 0 |
| Average | 4.1 | 3932 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $5 million in RIVE’s case. Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) is the most popular stock in this table. On the other hand Golden Minerals Co (NYSE:AUMN) is the least popular one with only 1 bullish hedge fund positions. Riverview Financial Corporation (NASDAQ:RIVE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RIVE is 60.8. 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. Hedge funds were also right about betting on RIVE as the stock returned 10.4% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
