Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about The RMR Group Inc. (NASDAQ:RMR).
The RMR Group Inc. (NASDAQ:RMR) was in 16 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 22. RMR has seen a decrease in hedge fund sentiment in recent months. There were 17 hedge funds in our database with RMR positions at the end of the fourth quarter. Our calculations also showed that RMR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Do Hedge Funds Think RMR Is A Good Stock To Buy Now?
At Q1’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in RMR a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Nantahala Capital Management was the largest shareholder of The RMR Group Inc. (NASDAQ:RMR), with a stake worth $26.5 million reported as of the end of March. Trailing Nantahala Capital Management was Renaissance Technologies, which amassed a stake valued at $22.6 million. Hawk Ridge Management, Engine Capital, and V3 Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Engine Capital allocated the biggest weight to The RMR Group Inc. (NASDAQ:RMR), around 3.45% of its 13F portfolio. V3 Capital is also relatively very bullish on the stock, setting aside 1.41 percent of its 13F equity portfolio to RMR.
Seeing as The RMR Group Inc. (NASDAQ:RMR) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there exists a select few money managers that slashed their full holdings by the end of the first quarter. At the top of the heap, David Harding’s Winton Capital Management cut the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth about $0.3 million in stock. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The RMR Group Inc. (NASDAQ:RMR) but similarly valued. We will take a look at Qiwi PLC (NASDAQ:QIWI), Kadmon Holdings, Inc. (NYSE:KDMN), GAN Limited (NASDAQ:GAN), iHuman Inc. (NYSE:IH), Zepp Health Corporation (NYSE:ZEPP), Rafael Holdings, Inc. (NYSE:RFL), and Cass Information Systems (NASDAQ:CASS). This group of stocks’ market valuations are similar to RMR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QIWI | 5 | 18584 | -4 |
| KDMN | 24 | 286093 | -7 |
| GAN | 11 | 64056 | -11 |
| IH | 1 | 371 | -3 |
| ZEPP | 5 | 4780 | 1 |
| RFL | 8 | 47979 | 1 |
| CASS | 9 | 25992 | 5 |
| Average | 9 | 63979 | -2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $100 million in RMR’s case. Kadmon Holdings, Inc. (NYSE:KDMN) is the most popular stock in this table. On the other hand iHuman Inc. (NYSE:IH) is the least popular one with only 1 bullish hedge fund positions. The RMR Group Inc. (NASDAQ:RMR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RMR is 58.4. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately RMR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RMR were disappointed as the stock returned -4.3% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
