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 experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the 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 RPC, Inc. (NYSE:RES).
Is RPC, Inc. (NYSE:RES) worth your attention right now? Prominent investors are becoming less hopeful. The number of bullish hedge fund positions dropped by 4 recently. Our calculations also showed that RES isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Mario Gabelli of GAMCO Investors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to take a glance at the latest hedge fund action encompassing RPC, Inc. (NYSE:RES).
What have hedge funds been doing with RPC, Inc. (NYSE:RES)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards RES over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies holds the biggest position in RPC, Inc. (NYSE:RES). Renaissance Technologies has a $16.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, holding a $15.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Mario Gabelli’s GAMCO Investors, Ken Griffin’s Citadel Investment Group and Ken Fisher’s Fisher Asset Management. In terms of the portfolio weights assigned to each position Arosa Capital Management allocated the biggest weight to RPC, Inc. (NYSE:RES), around 0.2% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.13 percent of its 13F equity portfolio to RES.
Due to the fact that RPC, Inc. (NYSE:RES) has experienced declining sentiment from hedge fund managers, logic holds that there is a sect of money managers that slashed their entire stakes heading into Q4. Interestingly, Noam Gottesman’s GLG Partners said goodbye to the largest investment of the 750 funds followed by Insider Monkey, comprising close to $1.6 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund said goodbye to about $0.7 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 4 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as RPC, Inc. (NYSE:RES) but similarly valued. These stocks are Helix Energy Solutions Group Inc. (NYSE:HLX), Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY), The Children’s Place Inc. (NASDAQ:PLCE), and GMS Inc. (NYSE:GMS). This group of stocks’ market caps are similar to RES’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HLX | 13 | 70293 | 2 |
| PLAY | 18 | 278866 | -3 |
| PLCE | 20 | 247278 | 1 |
| GMS | 23 | 130082 | 3 |
| Average | 18.5 | 181630 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $66 million in RES’s case. GMS Inc. (NYSE:GMS) is the most popular stock in this table. On the other hand Helix Energy Solutions Group Inc. (NYSE:HLX) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks RPC, Inc. (NYSE:RES) is even less popular than HLX. Hedge funds dodged a bullet by taking a bearish stance towards RES. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately RES wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); RES investors were disappointed as the stock returned -31.2% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
