5 Best Small-Cap Stocks Ready To Explode According To Hedge Funds

1. RH (NYSE:RH)

Number of Hedge Fund Holders: 49

RH is a leading American home furnishings retailer. The company offers furniture, lighting, textiles, bathroom accessories, décor, outdoor and garden, and child and teen furnishings. RH is the most explosive small-cap stock to buy now according to hedge funds and has gained 21.95% over the past 6 months.

At the close of the fourth quarter of 2022, 49 hedge funds held stakes in RH (NYSE:RH). The total value of these stakes amounted to $2.66 billion. This is compared to 48 hedge funds in the preceding quarter with stakes worth $2.31 billion. The hedge fund sentiment for the stock is positive.

As of December 31, Warren Buffett’s Berkshire Hathaway is the leading investor in RH (NYSE:RH) and has disclosed a position worth $630.5 million in the company.

Here is what Polen Capital had to say about  RH (NYSE:RH) in its Q4 2022 investor letter:

“RH (NYSE:RH) is a leading luxury retailer in home furnishings, including high end luxury furniture, home décor, lighting, textiles, etc. We have a long history with RH as an existing holding in our U.S. SMID strategy, and we capitalized on the market volatility to add it to the Portfolio. The company’s competitive advantage stems from the strength of its brand and its unique—and often misunderstood—business model, which has allowed RH to build a luxury empire at scale and with high returns on capital. We believe RH has a long runway to expand into other home furnishings categories, expand its footprint internationally, and launch new luxury categories. While the business faces near-term challenges, and the stock’s valuation reflects this, we are confident in the company’s long-term prospects and the long track record of CEO Gary Friedman.”

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