Hedge Funds Are Dumping Resource Capital Corp. (RSO)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a turbulent quarter, which certainly propelled them to adjust their equity holdings so as to maintain their desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Resource Capital Corp. (NYSE:RSO).

Resource Capital Corp. (NYSE:RSO) was in 7 hedge funds’ portfolios at the end of the third quarter of 2015. Resource Capital Corp. has experienced a decrease in enthusiasm from smart money in recent months. There were 11 hedge funds in our database with Resource Capital Corp. positions at the end of the previous quarter. At the end of this article we will also compare Resource Capital Corp. to other stocks including Univest Corp. of PA (NASDAQ:UVSP), Cliffs Natural Resources Inc (NYSE:CLF), and A10 Networks Inc (NYSE:ATEN) to get a better sense of its popularity.

If you’d ask most shareholders, hedge funds are seen as slow, outdated investment vehicles of the past. While there are more than 8,000 funds in operation at the moment, our researchers look at the crème de la crème of this group, about 700 funds. It is estimated that this group of investors handle most of the smart money’s total asset base, and by shadowing their matchless picks, Insider Monkey has determined various investment strategies that have historically surpassed Mr. Market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, we’re going to check out the new action surrounding Resource Capital Corp. (NYSE:RSO).

What have hedge funds been doing with Resource Capital Corp. (NYSE:RSO)?

At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a 36% fall from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or had already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Resource Capital Corp. (NYSE:RSO), worth close to $5.1 million, corresponding to less than 0.1% of its total 13F portfolio. Coming in second is Richard Mashaal of Rima Senvest Management, with a $1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish contain Vishal Bhutani and Joshua Bederman’s Pyrrho Capital Management, and Ken Griffin’s Citadel Investment Group.

Because Resource Capital Corp. (NYSE:RSO) has experienced falling interest from hedge fund managers, we can see that there exists a select few funds that decided to sell off their positions entirely by the end of the third quarter. Intriguingly, Israel Englander’s Millennium Management cut the largest stake of the 700 funds tracked by Insider Monkey, comprising an estimated $0.4 million in stock. John Fichthorn’s fund, Dialectic Capital Management, also dropped its stock, about $0.2 million worth. These transactions are interesting, as total hedge fund interest was cut by 4 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Resource Capital Corp. (NYSE:RSO) but similarly valued. We will take a look at Univest Corp. of PA (NASDAQ:UVSP), Cliffs Natural Resources Inc (NYSE:CLF), A10 Networks Inc (NYSE:ATEN), and Theravance Biopharma Inc (NASDAQ:TBPH). This group of stocks’ market valuations match Resource Capital Corp.’s market valuation.

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $8 million in Resource Capital Corp.’s case. Cliffs Natural Resources Inc (NYSE:CLF) is the most popular stock in this table. On the other hand Univest Corp. of PA (NASDAQ:UVSP) is the least popular one with only 5 bullish hedge fund positions. Resource Capital Corp. (NYSE:RSO) is not the least popular stock in this group but hedge fund interest is still below average, as is capital invested by smart money in the stock. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Cliffs Natural Resources might be a better candidate to consider a long position in.