After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Red Violet, Inc. (NASDAQ:RDVT).
Red Violet, Inc. (NASDAQ:RDVT) investors should be aware of a decrease in support from the world’s most elite money managers recently. Red Violet, Inc. (NASDAQ:RDVT) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 9. Our calculations also showed that RDVT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
At the moment there are a multitude of metrics investors can use to appraise publicly traded companies. Some of the most underrated metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outpace the market by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Cliff Asness of AQR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to view the latest hedge fund action encompassing Red Violet, Inc. (NASDAQ:RDVT).
Do Hedge Funds Think RDVT Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RDVT over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Trigran Investments held the most valuable stake in Red Violet, Inc. (NASDAQ:RDVT), which was worth $17.1 million at the end of the fourth quarter. On the second spot was Ophir Asset Management which amassed $11 million worth of shares. Venator Capital Management was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ophir Asset Management allocated the biggest weight to Red Violet, Inc. (NASDAQ:RDVT), around 2.21% of its 13F portfolio. Trigran Investments is also relatively very bullish on the stock, earmarking 2.12 percent of its 13F equity portfolio to RDVT.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: AQR Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified RDVT as a viable investment and initiated a position in the stock.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Red Violet, Inc. (NASDAQ:RDVT) but similarly valued. These stocks are Larimar Therapeutics, Inc. (NASDAQ:LRMR), Vista Oil & Gas, S.A.B. de C.V. (NYSE:VIST), Citius Pharmaceuticals, Inc. (NASDAQ:CTXR), Calyxt, Inc. (NASDAQ:CLXT), CompX International Inc. (NYSE:CIX), LCNB Corp. (NASDAQ:LCNB), and Maui Land & Pineapple Co. (NYSE:MLP). This group of stocks’ market values match RDVT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LRMR | 20 | 155078 | 3 |
| VIST | 9 | 20667 | -2 |
| CTXR | 5 | 2783 | 2 |
| CLXT | 5 | 1191 | 1 |
| CIX | 4 | 11901 | 0 |
| LCNB | 1 | 3072 | -2 |
| MLP | 1 | 2032 | -2 |
| Average | 6.4 | 28103 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $33 million in RDVT’s case. Larimar Therapeutics, Inc. (NASDAQ:LRMR) is the most popular stock in this table. On the other hand LCNB Corp. (NASDAQ:LCNB) is the least popular one with only 1 bullish hedge fund positions. Red Violet, Inc. (NASDAQ:RDVT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RDVT is 19.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on RDVT as the stock returned 20.7% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
