Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost a third of its value since the end of July. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2018 yielded an average return of 6.7% year-to-date, vs. a gain of 2.6% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Revlon Inc (NYSE:REV).
Revlon Inc (NYSE:REV) was in 26 hedge funds’ portfolios at the end of September. REV has seen an increase in hedge fund sentiment recently. There were 20 hedge funds in our database with REV holdings at the end of the previous quarter. Our calculations also showed that rev isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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.
Let’s analyze the latest hedge fund action surrounding Revlon Inc (NYSE:REV).
What have hedge funds been doing with Revlon Inc (NYSE:REV)?
At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in REV at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jamie Zimmerman’s Litespeed Management has the most valuable position in Revlon Inc (NYSE:REV), worth close to $31.6 million, accounting for 32.9% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, led by Jim Simons, holding a $29.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions comprise Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners, Kamran Moghtaderi’s Eversept Partners and Eric F. Billings’s Billings Capital Management.
As industrywide interest jumped, some big names were breaking ground themselves. Billings Capital Management, managed by Eric F. Billings, initiated the largest position in Revlon Inc (NYSE:REV). Billings Capital Management had $13.1 million invested in the company at the end of the quarter. Richard S. Pzena’s Pzena Investment Management also initiated a $10.4 million position during the quarter. The other funds with brand new REV positions are Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Vishal Saluja and Pham Quang’s Endurant Capital Management, and Steve Cohen’s Point72 Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Revlon Inc (NYSE:REV) but similarly valued. We will take a look at Schweitzer-Mauduit International, Inc. (NYSE:SWM), State Bank Financial Corp (NASDAQ:STBZ), Trupanion Inc (NYSE:TRUP), and Apogee Enterprises, Inc. (NASDAQ:APOG). This group of stocks’ market caps match REV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SWM | 14 | 40845 | -2 |
| STBZ | 21 | 129714 | 1 |
| TRUP | 9 | 128533 | 1 |
| APOG | 17 | 154251 | -3 |
| Average | 15.25 | 113336 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $197 million in REV’s case. State Bank Financial Corp (NASDAQ:STBZ) is the most popular stock in this table. On the other hand Trupanion Inc (NYSE:TRUP) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Revlon Inc (NYSE:REV) is more popular among hedge funds. 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.
Disclosure: None. This article was originally published at Insider Monkey.
