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 these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of RPC, Inc. (NYSE:RES).
Is RPC, Inc. (NYSE:RES) undervalued? Investors who are in the know are getting more bullish. The number of bullish hedge fund bets increased by 1 lately. Our calculations also showed that RES 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). RES was in 13 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 12 hedge funds in our database with RES holdings at the end of the previous quarter.
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. Keeping this in mind let’s go over the recent hedge fund action encompassing RPC, Inc. (NYSE:RES).
What have hedge funds been doing with RPC, Inc. (NYSE:RES)?
Heading into the first quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in RES 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, Mario Gabelli’s GAMCO Investors has the biggest position in RPC, Inc. (NYSE:RES), worth close to $14.8 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, with a $10.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to RPC, Inc. (NYSE:RES), around 0.12% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to RES.
Consequently, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the largest position in RPC, Inc. (NYSE:RES). Balyasny Asset Management had $1.5 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $1 million position during the quarter. The other funds with brand new RES positions are Scott Wallace’s Wallace Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Frederick DiSanto’s Ancora Advisors.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as RPC, Inc. (NYSE:RES) but similarly valued. We will take a look at GreenTree Hospitality Group Ltd. (NYSE:GHG), MRC Global Inc (NYSE:MRC), Big Lots, Inc. (NYSE:BIG), and Natus Medical Incorporated (NASDAQ:NTUS). This group of stocks’ market valuations resemble RES’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $47 million in RES’s case. Big Lots, Inc. (NYSE:BIG) is the most popular stock in this table. On the other hand GreenTree Hospitality Group Ltd. (NYSE:GHG) is the least popular one with only 8 bullish hedge fund positions. RPC, Inc. (NYSE:RES) 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. 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 RES wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); RES investors were disappointed as the stock returned -42% 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 most of these stocks already outperformed the market in 2020.
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.