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The Rubicon Project Inc (RUBI): Hedge Fund Sentiment Unchanged

Does The Rubicon Project Inc (NYSE:RUBI) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.

Hedge fund interest in The Rubicon Project Inc (NYSE:RUBI) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare RUBI to other stocks including Asanko Gold Inc (NYSE:AKG), China Online Education Group (NYSE:COE), and Clearfield, Inc. (NASDAQ:CLFD) to get a better sense of its popularity.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Chuck Royce

Let’s take a glance at the latest hedge fund action regarding The Rubicon Project Inc (NYSE:RUBI).

How have hedgies been trading The Rubicon Project Inc (NYSE:RUBI)?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards RUBI over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

RUBI_dec2018

The largest stake in The Rubicon Project Inc (NYSE:RUBI) was held by Sessa Capital, which reported holding $6.6 million worth of stock at the end of September. It was followed by Roumell Asset Management with a $6.6 million position. Other investors bullish on the company included Royce & Associates, D E Shaw, and Ariel Investments.

Due to the fact that The Rubicon Project Inc (NYSE:RUBI) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedgies who sold off their positions entirely in the third quarter. At the top of the heap, Frederick DiSanto’s Ancora Advisors dropped the biggest investment of all the hedgies monitored by Insider Monkey, worth an estimated $0.5 million in stock. J. Carlo Cannell’s fund, Cannell Capital, also sold off its stock, about $0.2 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to The Rubicon Project Inc (NYSE:RUBI). These stocks are Asanko Gold Inc (NYSE:AKG), China Online Education Group (NYSE:COE), Clearfield, Inc. (NASDAQ:CLFD), and Cue Biopharma, Inc. (NASDAQ:CUE). This group of stocks’ market valuations resemble RUBI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AKG 8 15070 -1
COE 3 6634 1
CLFD 5 8520 1
CUE 2 8445 0
Average 4.5 9667 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $33 million in RUBI’s case. Asanko Gold Inc (NYSE:AKG) is the most popular stock in this table. On the other hand Cue Biopharma, Inc. (NASDAQ:CUE) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks The Rubicon Project Inc (NYSE:RUBI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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