Is Resource Capital Corp. (NYSE:RSO) a buy right now? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions dropped by 3 lately.
According to most shareholders, hedge funds are assumed to be unimportant, old financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, we at Insider Monkey hone in on the top tier of this group, around 450 funds. It is widely believed that this group controls most of the hedge fund industry’s total asset base, and by paying attention to their top picks, we have deciphered a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as beneficial, positive insider trading activity is a second way to parse down the stock market universe. Obviously, there are a variety of stimuli for a corporate insider to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this strategy if investors know where to look (learn more here).
With all of this in mind, let’s take a glance at the key action regarding Resource Capital Corp. (NYSE:RSO).
What does the smart money think about Resource Capital Corp. (NYSE:RSO)?
Heading into 2013, a total of 7 of the hedge funds we track were long in this stock, a change of -30% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly.
According to our comprehensive database, Omega Advisors, managed by Leon Cooperman, holds the largest position in Resource Capital Corp. (NYSE:RSO). Omega Advisors has a $4.5 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which held a $3.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Jim Simons’s Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors and Bill Miller’s Legg Mason Capital Management.
Since Resource Capital Corp. (NYSE:RSO) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of money managers who sold off their entire stakes at the end of the year. Intriguingly, Brian Taylor’s Pine River Capital Management said goodbye to the largest position of all the hedgies we watch, totaling about $0.8 million in stock.. D. E. Shaw’s fund, D E Shaw, also dumped its stock, about $0.6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds at the end of the year.
What do corporate executives and insiders think about Resource Capital Corp. (NYSE:RSO)?
Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the last half-year time frame, Resource Capital Corp. (NYSE:RSO) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Resource Capital Corp. (NYSE:RSO). These stocks are Education Realty Trust, Inc. (NYSE:EDR), Associated Estates Realty Corporation (NYSE:AEC), Dynex Capital Inc (NYSE:DX), Silver Bay Realty Trust Corp (NYSE:SBY), and Apollo Residential Mortgage Inc (NYSE:AMTG). All of these stocks are in the reit – residential industry and their market caps are similar to RSO’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Education Realty Trust, Inc. (NYSE:EDR) | 4 | 1 | 3 |
| Associated Estates Realty Corporation (NYSE:AEC) | 6 | 0 | 5 |
| Dynex Capital Inc (NYSE:DX) | 6 | 0 | 1 |
| Silver Bay Realty Trust Corp (NYSE:SBY) | 11 | 8 | 3 |
| Apollo Residential Mortgage Inc (NYSE:AMTG) | 8 | 1 | 0 |
With the returns exhibited by the aforementioned studies, retail investors should always keep an eye on hedge fund and insider trading activity, and Resource Capital Corp. (NYSE:RSO) is no exception.
