Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in RadNet Inc. (NASDAQ:RDNT)? The smart money sentiment can provide an answer to this question.
RadNet Inc. (NASDAQ:RDNT) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of the first quarter of 2019. At the end of this article we will also compare RDNT to other stocks including Sunlands Online Education Group (NYSE:STG), Flushing Financial Corporation (NASDAQ:FFIC), and Merchants Bancorp (NASDAQ:MBIN) to get a better sense of its popularity.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a glance at the recent hedge fund action regarding RadNet Inc. (NASDAQ:RDNT).
What does smart money think about RadNet Inc. (NASDAQ:RDNT)?
Heading into the second quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in RDNT a year ago. 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Moab Capital Partners, managed by Michael M. Rothenberg, holds the biggest position in RadNet Inc. (NASDAQ:RDNT). Moab Capital Partners has a $28.2 million position in the stock, comprising 6.7% of its 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $22.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism encompass Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Cliff Asness’s AQR Capital Management and Jonathan Lourie and Stuart Fiertz’s Cheyne Capital.
Due to the fact that RadNet Inc. (NASDAQ:RDNT) has faced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of fund managers who were dropping their full holdings in the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management said goodbye to the biggest stake of the 700 funds followed by Insider Monkey, comprising an estimated $0.8 million in stock. David Harding’s fund, Winton Capital Management, also dumped its stock, about $0.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as RadNet Inc. (NASDAQ:RDNT) but similarly valued. These stocks are Sunlands Technology Group (NYSE:STG), Flushing Financial Corporation (NASDAQ:FFIC), Merchants Bancorp (NASDAQ:MBIN), and Evolus, Inc. (NASDAQ:EOLS). This group of stocks’ market values resemble RDNT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STG | 2 | 1120 | 0 |
| FFIC | 8 | 42537 | 1 |
| MBIN | 3 | 1199 | -1 |
| EOLS | 6 | 3963 | 3 |
| Average | 4.75 | 12205 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $84 million in RDNT’s case. Flushing Financial Corporation (NASDAQ:FFIC) is the most popular stock in this table. On the other hand Sunlands Technology Group (NYSE:STG) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks RadNet Inc. (NASDAQ:RDNT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on RDNT, though not to the same extent, as the stock returned 5.1% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
