Hedge Funds Are Crazy About Rick’s Cabaret Int’l, Inc (RICK)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Rick’s Cabaret Int’l, Inc (NASDAQ:RICK).

Is Rick’s Cabaret Int’l, Inc (NASDAQ:RICK) worth your attention right now? Money managers are taking an optimistic view. The number of bullish hedge fund positions inched up by 3 recently. RICK was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. There were 8 hedge funds in our database with RICK positions 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 Atlantic Alliance Partnership Corp (NASDAQ:AAPC), Cambridge Capital Acquisition Corp (NASDAQ:CAMB), and Horizon Technology Finance Corp (NASDAQ:HRZN) to gather more data points.

In today’s marketplace there are tons of formulas stock market investors put to use to appraise stocks. A duo of the best formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the S&P 500 by a significant amount (see the details here).

With all of this in mind, we’re going to view the latest action encompassing Rick’s Cabaret Int’l, Inc (NASDAQ:RICK).

Hedge fund activity in Rick’s Cabaret Int’l, Inc (NASDAQ:RICK)

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 38% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Whitebox Advisors, managed by Andy Redleaf, holds the most valuable position in Rick’s Cabaret Int’l, Inc (NASDAQ:RICK). Whitebox Advisors has a $2 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Peter Keane’s Keane Capital Management, with a $1.8 million position; 2.3% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism comprise Jim Simons’ Renaissance Technologies, Paul Solit’s Potomac Capital Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Algert Coldiron Investors established the most valuable position in Rick’s Cabaret Int’l, Inc (NASDAQ:RICK). Algert Coldiron Investors had $0.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.1 million position during the quarter. The other funds with brand new RICK positions are Dmitry Balyasny’s Balyasny Asset Management and Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks similar to Rick’s Cabaret Int’l, Inc (NASDAQ:RICK). We will take a look at Atlantic Alliance Partnership Corp (NASDAQ:AAPC), Cambridge Capital Acquisition Corp (NASDAQ:CAMB), Horizon Technology Finance Corp (NASDAQ:HRZN), and Evans Bancorp Inc. (NYSEMKT:EVBN). This group of stocks’ market caps resemble RICK’s market cap.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $7 million in RICK’s case. Atlantic Alliance Partnership Corp (NASDAQ:AAPC) is the most popular stock in this table with a total of seven funds reporting long positions, while Cambridge Capital Acquisition Corp (NASDAQ:CAMB) is the least popular one. Compared to these stocks, Rick’s Cabaret Int’l, Inc (NASDAQ:RICK) 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.