How do we determine whether RR Donnelley & Sons Company (NASDAQ:RRD) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
RR Donnelley & Sons Company (NASDAQ:RRD) was in 15 hedge funds’ portfolios at the end of September. RRD has seen an increase in enthusiasm from smart money lately. There were 14 hedge funds in our database with RRD positions at the end of the previous quarter. Our calculations also showed that rrd isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the new hedge fund action regarding RR Donnelley & Sons Company (NASDAQ:RRD).
What have hedge funds been doing with RR Donnelley & Sons Company (NASDAQ:RRD)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in RRD at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Brigade Capital held the most valuable stake in RR Donnelley & Sons Company (NASDAQ:RRD), which was worth $8.1 million at the end of the third quarter. On the second spot was Elm Ridge Capital which amassed $4.9 million worth of shares. Moreover, Saba Capital, Citadel Investment Group, and Whitebox Advisors were also bullish on RR Donnelley & Sons Company (NASDAQ:RRD), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, specific money managers have jumped into RR Donnelley & Sons Company (NASDAQ:RRD) headfirst. Brigade Capital, managed by Don Morgan, created the most outsized position in RR Donnelley & Sons Company (NASDAQ:RRD). Brigade Capital had $8.1 million invested in the company at the end of the quarter. Andy Redleaf’s Whitebox Advisors also initiated a $2.6 million position during the quarter. The following funds were also among the new RRD investors: Matthew Hulsizer’s PEAK6 Capital Management, Israel Englander’s Millennium Management, and Mike Vranos’s Ellington.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as RR Donnelley & Sons Company (NYSE:RRD) but similarly valued. We will take a look at NI Holdings, Inc. (NASDAQ:NODK), Computer Programs & Systems, Inc. (NASDAQ:CPSI), Kadmon Holdings, Inc. (NYSE:KDMN), and Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC). This group of stocks’ market values are closest to RRD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NODK | 4 | 23534 | 1 |
| CPSI | 8 | 27094 | -2 |
| KDMN | 13 | 102285 | 2 |
| NGVC | 11 | 37535 | -1 |
| Average | 9 | 47612 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $25 million in RRD’s case. Kadmon Holdings, Inc. (NYSE:KDMN) is the most popular stock in this table. On the other hand NI Holdings, Inc. (NASDAQ:NODK) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks RR Donnelley & Sons Company (NYSE:RRD) 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.
