With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was RadNet Inc. (NASDAQ:RDNT).
Is RadNet Inc. (NASDAQ:RDNT) a buy here? Money managers are in a bullish mood. The number of bullish hedge fund bets moved up by 3 lately. Our calculations also showed that RDNT 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.
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’ 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.
Justin John Ferayorni of Tamarack Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the recent hedge fund action regarding RadNet Inc. (NASDAQ:RDNT).
Hedge fund activity in RadNet Inc. (NASDAQ:RDNT)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in RDNT over the last 17 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in RadNet Inc. (NASDAQ:RDNT), which was worth $26.3 million at the end of the third quarter. On the second spot was Nantahala Capital Management which amassed $16.2 million worth of shares. Royce & Associates, Cheyne Capital, and Tamarack Capital Management were 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 Cheyne Capital allocated the biggest weight to RadNet Inc. (NASDAQ:RDNT), around 4.41% of its 13F portfolio. Tamarack Capital Management is also relatively very bullish on the stock, earmarking 1.22 percent of its 13F equity portfolio to RDNT.
As aggregate interest increased, key money managers were breaking ground themselves. Tamarack Capital Management, managed by Justin John Ferayorni, initiated the largest position in RadNet Inc. (NASDAQ:RDNT). Tamarack Capital Management had $4.7 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $2.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners and Michael Gelband’s ExodusPoint Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as RadNet Inc. (NASDAQ:RDNT) but similarly valued. These stocks are Uxin Limited (NASDAQ:UXIN), Banc of California, Inc. (NYSE:BANC), Conn’s, Inc. (NASDAQ:CONN), and Mobileiron Inc (NASDAQ:MOBL). This group of stocks’ market values match RDNT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UXIN | 4 | 23965 | 1 |
| BANC | 13 | 84719 | -1 |
| CONN | 16 | 133657 | -5 |
| MOBL | 17 | 127698 | 0 |
| Average | 12.5 | 92510 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $72 million in RDNT’s case. Mobileiron Inc (NASDAQ:MOBL) is the most popular stock in this table. On the other hand Uxin Limited (NASDAQ:UXIN) is the least popular one with only 4 bullish hedge fund positions. RadNet Inc. (NASDAQ:RDNT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on RDNT as the stock returned 33.4% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
