Sturm, Ruger & Company (RGR): Are Hedge Funds Right About This Stock?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Sturm, Ruger & Company (NYSE:RGR) changed recently.

Sturm, Ruger & Company (NYSE:RGR) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 27. RGR has seen an increase in support from the world’s most elite money managers of late. There were 17 hedge funds in our database with RGR positions at the end of the fourth quarter. Our calculations also showed that RGR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a look at the new hedge fund action regarding Sturm, Ruger & Company (NYSE:RGR).

Do Hedge Funds Think RGR Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RGR over the last 23 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Is RGR A Good Stock To Buy?

The largest stake in Sturm, Ruger & Company (NYSE:RGR) was held by Renaissance Technologies, which reported holding $75 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $19.6 million position. Other investors bullish on the company included Citadel Investment Group, GLG Partners, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Plaisance Capital allocated the biggest weight to Sturm, Ruger & Company (NYSE:RGR), around 1.43% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, earmarking 0.12 percent of its 13F equity portfolio to RGR.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Sturm, Ruger & Company (NYSE:RGR) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Sturm, Ruger & Company (NYSE:RGR). Balyasny Asset Management had $2.6 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $1 million investment in the stock during the quarter. The following funds were also among the new RGR investors: Bruce Kovner’s Caxton Associates LP, Donald Sussman’s Paloma Partners, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s also examine hedge fund activity in other stocks similar to Sturm, Ruger & Company (NYSE:RGR). We will take a look at 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT), Vermilion Energy Inc (NYSE:VET), QAD Inc. (NASDAQ:QADA), The Chefs Warehouse, Inc (NASDAQ:CHEF), NextPoint Residential Trust Inc (NYSE:NXRT), MagnaChip Semiconductor Corporation (NYSE:MX), and ChipMOS Technologies Inc (NASDAQ:IMOS). This group of stocks’ market values are similar to RGR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FDMT 18 397954 -6
VET 10 25503 0
QADA 14 161878 -1
CHEF 15 119611 -1
NXRT 9 31370 -1
MX 30 344567 2
IMOS 3 53312 1
Average 14.1 162028 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $162 million. That figure was $135 million in RGR’s case. MagnaChip Semiconductor Corporation (NYSE:MX) is the most popular stock in this table. On the other hand ChipMOS Technologies Inc (NASDAQ:IMOS) is the least popular one with only 3 bullish hedge fund positions. Sturm, Ruger & Company (NYSE:RGR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RGR is 65.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on RGR as the stock returned 18.6% since the end of Q1 (through 7/16) 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.