“Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Rudolph Technologies Inc (NYSE:RTEC).
Is Rudolph Technologies Inc (NYSE:RTEC) the right pick for your portfolio? Prominent investors are taking a bullish view. The number of long hedge fund bets went up by 1 in recent months. Our calculations also showed that RTEC isn’t among the 30 most popular stocks among hedge funds. RTEC was in 16 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with RTEC positions at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s analyze the new hedge fund action surrounding Rudolph Technologies Inc (NYSE:RTEC).
How are hedge funds trading Rudolph Technologies Inc (NYSE:RTEC)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards RTEC over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Rudolph Technologies Inc (NYSE:RTEC) was held by Renaissance Technologies, which reported holding $30 million worth of stock at the end of September. It was followed by D E Shaw with a $25.2 million position. Other investors bullish on the company included Royce & Associates, AQR Capital Management, and Citadel Investment Group.
Consequently, some big names have jumped into Rudolph Technologies Inc (NYSE:RTEC) headfirst. HBK Investments, managed by David Costen Haley, assembled the most valuable position in Rudolph Technologies Inc (NYSE:RTEC). HBK Investments had $1.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.4 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Rudolph Technologies Inc (NYSE:RTEC). These stocks are Mesoblast Limited (NASDAQ:MESO), Central Pacific Financial Corp. (NYSE:CPF), Dynavax Technologies Corporation (NASDAQ:DVAX), and Univest Corp. of PA (NASDAQ:UVSP). This group of stocks’ market values are closest to RTEC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MESO | 2 | 1563 | 1 |
| CPF | 12 | 80425 | -4 |
| DVAX | 19 | 151557 | -1 |
| UVSP | 7 | 32705 | 1 |
| Average | 10 | 66563 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $118 million in RTEC’s case. Dynavax Technologies Corporation (NASDAQ:DVAX) is the most popular stock in this table. On the other hand Mesoblast Limited (NASDAQ:MESO) is the least popular one with only 2 bullish hedge fund positions. Rudolph Technologies Inc (NYSE:RTEC) 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 DVAX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
