At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Ring Energy Inc (NYSEMKT:REI) was in 11 hedge funds’ portfolios at the end of September. REI shareholders have witnessed an increase in enthusiasm from smart money recently. There were 8 hedge funds in our database with REI positions at the end of the previous quarter. At the end of this article we will also compare REI to other stocks including Hawkins, Inc. (NASDAQ:HWKN), MFS Multimarket Income Trust (NYSE:MMT), and Vocera Communications Inc (NYSE:VCRA) to get a better sense of its popularity.
Follow Ring Energy Inc. (OTC:REI)
Follow Ring Energy Inc. (OTC:REI)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
QiuJu Song/Shutterstock.com
With all of this in mind, we’re going to take a gander at the fresh action regarding Ring Energy Inc (NYSEMKT:REI).
How are hedge funds trading Ring Energy Inc (NYSEMKT:REI)?
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, up 38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in REI over the last 5 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management has the biggest position in Ring Energy Inc (NYSEMKT:REI), worth close to $28.3 million, amounting to 2.3% of its total 13F portfolio. Sitting at the No. 2 spot is Cannell Capital, led by J. Carlo Cannell, holding a $17.5 million position; 6.9% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions encompass Noam Gottesman’s GLG Partners, Richard Driehaus’s Driehaus Capital and Jeffrey Tannenbaum’s Fir Tree. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key money managers were breaking ground themselves. Jeffrey Tannenbaum’s Fir Tree initiated the most outsized position in Ring Energy Inc (NYSEMKT:REI). According to its latest 13F filing, the fund had $1.3 million invested in the company at the end of the quarter. Robert B. Gillam’s McKinley Capital Management also made a $0.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks similar to Ring Energy Inc (NYSEMKT:REI). We will take a look at Hawkins, Inc. (NASDAQ:HWKN), MFS Multimarket Income Trust (NYSE:MMT), Vocera Communications Inc (NYSE:VCRA), and Park-Ohio Holdings Corp. (NASDAQ:PKOH). All of these stocks’ market caps are similar to REI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HWKN | 4 | 48394 | -1 |
| MMT | 4 | 23633 | 4 |
| VCRA | 15 | 56938 | 1 |
| PKOH | 9 | 41224 | 5 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $63 million in REI’s case. Vocera Communications Inc (NYSE:VCRA) is the most popular stock in this table. On the other hand Hawkins, Inc. (NASDAQ:HWKN) is the least popular one with only 4 bullish hedge fund positions. Ring Energy Inc (NYSEMKT:REI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard VCRA might be a better candidate to consider taking a long position in.
Disclosure: None
