Hedge Funds Are Selling RPM International Inc. (RPM)

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding RPM International Inc. (NYSE:RPM).

Is RPM International Inc. (NYSE:RPM) a buy, sell, or hold? Hedge funds are in a pessimistic mood. The number of bullish hedge fund positions dropped by 5 recently. 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 Jack Henry & Associates, Inc. (NASDAQ:JKHY), DDR Corp (NYSE:DDR), and Frontier Communications Corp (NASDAQ:FTR) to gather more data points.

In the financial world, there are tons of tools stock market investors put to use to size up their holdings. Two of the most under-the-radar tools are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top money managers can outperform their index-focused peers by a significant margin (see the details here).

With all of this in mind, we’re going to view the latest action regarding RPM International Inc. (NYSE:RPM).

How have hedgies been trading RPM International Inc. (NYSE:RPM)?

At the end of September, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 22% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Alyeska Investment Group, managed by Anand Parekh, holds the largest position in RPM International Inc. (NYSE:RPM). Alyeska Investment Group has a $24.1 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Steve Cohen of Point72 Asset Management, with a $9.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Richard Chilton’s Chilton Investment Company, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co.

Judging by the fact that RPM International Inc. (NYSE:RPM) has witnessed a falling interest from hedge fund managers, it’s safe to say that there were a few hedge funds who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Jonathan Barrett and Paul Segal’s Luminus Management dropped the biggest position of the 700 funds watched by Insider Monkey, valued at close to $14.2 million in stock, and Phill Gross and Robert Atchinson’s Adage Capital Management was right behind this move, as the fund sold off about $9.8 million worth of shares. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to RPM International Inc. (NYSE:RPM). We will take a look at Jack Henry & Associates, Inc. (NASDAQ:JKHY), DDR Corp (NYSE:DDR), Frontier Communications Corp (NASDAQ:FTR), and CBOE Holdings, Inc (NASDAQ:CBOE). This group of stocks’ market caps matches RPM International Inc. (NYSE:RPM)’s market cap.

As you can see, these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $326 million. That figure was $75 million in RPM International Inc. (NYSE:RPM)’s case. Frontier Communications Corp (NASDAQ:FTR) is the most popular stock in this table. On the other hand, DDR Corp (NYSE:DDR) is the least popular one with only 16 bullish hedge fund positions. RPM International Inc. (NYSE:RPM) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Frontier Communications Corp (NASDAQ:FTR) might be a better candidate to consider a long position.