Where Do Hedge Funds Stand On Richardson Electronics, Ltd. (RELL)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Richardson Electronics, Ltd. (NASDAQ:RELL)?

Richardson Electronics, Ltd. (NASDAQ:RELL) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of September. Our calculations also showed that RELL 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as CohBar, Inc. (NASDAQ:CWBR), Red Lion Hotels Corporation (NYSE:RLH), and Community First Bancshares, Inc. (NASDAQ:CFBI) to gather more data points.

Video: Watch our video about the top 5 most popular hedge fund stocks.

At the moment there are many indicators stock traders can use to analyze their stock investments. A pair of the most underrated indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite investment managers can trounce the market by a very impressive amount (see the details here).

RENAISSANCE TECHNOLOGIES

Jim Simons founder of Renaissance Technologies

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 10 most profitable companies in the world 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. Now we’re going to check out the fresh hedge fund action surrounding Richardson Electronics, Ltd. (NASDAQ:RELL).

How have hedgies been trading Richardson Electronics, Ltd. (NASDAQ:RELL)?

At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 3 hedge funds with a bullish position in RELL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Richardson Electronics, Ltd. (NASDAQ:RELL), worth close to $4.3 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is Renaissance Technologies, with a $3.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish encompass Frederick DiSanto’s Ancora Advisors, Dov Gertzulin’s DG Capital Management and . In terms of the portfolio weights assigned to each position DG Capital Management allocated the biggest weight to Richardson Electronics, Ltd. (NASDAQ:RELL), around 0.37% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to RELL.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Richardson Electronics, Ltd. (NASDAQ:RELL) but similarly valued. These stocks are CohBar, Inc. (NASDAQ:CWBR), Red Lion Hotels Corporation (NYSE:RLH), Community First Bancshares, Inc. (NASDAQ:CFBI), Diffusion Pharmaceuticals Inc. (NASDAQ:DFFN), CollPlant Biotechnologies Ltd. (NASDAQ:CLGN), Akerna Corp. (NASDAQ:KERN), and Merrimack Pharmaceuticals Inc (NASDAQ:MACK). This group of stocks’ market caps resemble RELL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CWBR 2 432 0
RLH 9 23046 -2
CFBI 1 442 0
DFFN 4 2591 2
CLGN 2 195 1
KERN 3 423 -1
MACK 4 10257 1
Average 3.6 5341 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $9 million in RELL’s case. Red Lion Hotels Corporation (NYSE:RLH) is the most popular stock in this table. On the other hand Community First Bancshares, Inc. (NASDAQ:CFBI) is the least popular one with only 1 bullish hedge fund positions. Richardson Electronics, Ltd. (NASDAQ:RELL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RELL is 43.8. 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 RELL as the stock returned 11.4% 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.