Hedge funds don’t get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don’t realize is that 100% of the passive funds didn’t see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March. In we are going to take a closer look at the smart money sentiment towards RadNet Inc. (NASDAQ:RDNT).
Is RadNet Inc. (NASDAQ:RDNT) a good investment right now? The best stock pickers are selling. The number of bullish hedge fund bets were cut by 2 recently. Our calculations also showed that RDNT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you’d ask most stock holders, hedge funds are viewed as underperforming, old investment tools of years past. While there are over 8000 funds in operation today, Our experts hone in on the leaders of this club, about 850 funds. These investment experts watch over most of the hedge fund industry’s total asset base, and by paying attention to their first-class investments, Insider Monkey has spotted numerous investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with high accuracy, so we check out his stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s analyze the recent hedge fund action regarding RadNet Inc. (NASDAQ:RDNT).
How are hedge funds trading RadNet Inc. (NASDAQ:RDNT)?
Heading into the first quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in RDNT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, founded by Jim Simons, holds the biggest position in RadNet Inc. (NASDAQ:RDNT). Renaissance Technologies has a $35.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Tamarack Capital Management, led by Justin John Ferayorni, holding a $8.3 million position; 1.9% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish encompass Chuck Royce’s Royce & Associates, Jonathan Lourie and Stuart Fiertz’s Cheyne Capital and John Khabbaz’s Phoenician Capital. In terms of the portfolio weights assigned to each position Phoenician Capital allocated the biggest weight to RadNet Inc. (NASDAQ:RDNT), around 7.53% of its 13F portfolio. Cheyne Capital is also relatively very bullish on the stock, dishing out 4.15 percent of its 13F equity portfolio to RDNT.
Seeing as RadNet Inc. (NASDAQ:RDNT) has experienced falling interest from hedge fund managers, we can see that there were a few funds who sold off their positions entirely by the end of the third quarter. Intriguingly, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management dumped the biggest stake of the 750 funds tracked by Insider Monkey, comprising close to $16.2 million in stock. Michael M. Rothenberg’s fund, Moab Capital Partners, also dumped its stock, about $2.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to RadNet Inc. (NASDAQ:RDNT). We will take a look at Ebix Inc (NASDAQ:EBIX), Cryolife Inc (NYSE:CRY), DBV Technologies SA (NASDAQ:DBVT), and Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM). This group of stocks’ market valuations resemble RDNT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EBIX | 19 | 82096 | 1 |
| CRY | 10 | 55721 | 0 |
| DBVT | 13 | 278565 | 6 |
| RYTM | 10 | 302242 | 2 |
| Average | 13 | 179656 | 2.25 |
View table here if you experience formatting issues.
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 $180 million. That figure was $74 million in RDNT’s case. Ebix Inc (NASDAQ:EBIX) is the most popular stock in this table. On the other hand Cryolife Inc (NYSE:CRY) is the least popular one with only 10 bullish hedge fund positions. RadNet Inc. (NASDAQ:RDNT) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately RDNT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RDNT were disappointed as the stock returned -34.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
