Hedge Funds Are Banking On Bankrate Inc (RATE)

Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third-most popular stock, lost 10% amid uncertainty regarding interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool to identify the next stock to invest in.

Bankrate Inc (NYSE:RATE) investors should be aware of an increase in support from the world’s most elite money managers lately. RATE was in 17 hedge funds’ portfolios at the end of the third quarter of 2015. There were 15 hedge funds in our database with RATE holdings at the end of the previous quarter. 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 Franklin Street Properties Corp. (NYSEMKT:FSP), Physicians Realty Trust (NYSE:DOC), and Advanced Energy Industries, Inc. (NASDAQ:AEIS) to gather more data points.

In the 21st century investor’s toolkit there are a lot of formulas stock traders use to analyze publicly traded companies. A duo of the most useful formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outperform the market by a very impressive amount (see the details here).

Now, let’s take a glance at the recent action regarding Bankrate Inc (NYSE:RATE).

How have hedgies been trading Bankrate Inc (NYSE:RATE)?

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 13% gain from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially (or had already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Raging Capital Management, managed by William C. Martin, holds the most valuable position in Bankrate Inc (NYSE:RATE). Raging Capital Management has a $31.1 million position in the stock, comprising 4.1% of its 13F portfolio. Sitting in the 2 spot is Pivot Point Capital, managed by James A. Noonan, which holds a $21 million position; the fund has 9.4% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Joseph A. Jolson’s Harvest Capital Strategies, Chuck Royce’s Royce & Associates, and Jeffrey Jacobowitz’s Simcoe Capital Management.

Consequently, key hedge funds have jumped into Bankrate Inc (NYSE:RATE) headfirst. PEAK6 Capital Management, managed by Matthew Hulsizer, assembled the biggest position in Bankrate Inc (NYSE:RATE). PEAK6 Capital Management had $2.3 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $2.2 million investment in the stock during the quarter. The following funds were also among the new RATE investors: Glenn Russell Dubin’s Highbridge Capital Management, Israel Englander’s Millennium Management, and Peter Muller’s PDT Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Bankrate Inc (NYSE:RATE) but similarly valued. We will take a look at Franklin Street Properties Corp. (NYSEMKT:FSP), Physicians Realty Trust (NYSE:DOC), Advanced Energy Industries, Inc. (NASDAQ:AEIS), and ServisFirst Bancshares, Inc. (NASDAQ:SFBS). This group of stocks’ market valuations are similar to RATE’s market valuation.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $112 million in RATE’s case. Franklin Street Properties Corp. (NYSEMKT:FSP) is the most popular stock in this table. On the other hand ServisFirst Bancshares, Inc. (NASDAQ:SFBS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Bankrate Inc (NYSE:RATE) is more popular among hedge funds and has more capital invested in it. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.