It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards RadNet Inc. (NASDAQ:RDNT) during the quarter below.
Is RadNet Inc. (NASDAQ:RDNT) an outstanding investment right now? Prominent investors are betting on the stock. The number of bullish hedge fund positions moved up by 3 lately. Our calculations also showed that rdnt isn’t among the 30 most popular stocks among hedge funds. RDNT was in 14 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 11 hedge funds in our database with RDNT positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
We’re going to take a gander at the new hedge fund action surrounding RadNet Inc. (NASDAQ:RDNT).
How have hedgies been trading RadNet Inc. (NASDAQ:RDNT)?
At the end of the fourth quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards RDNT over the last 14 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
The largest stake in RadNet Inc. (NASDAQ:RDNT) was held by Moab Capital Partners, which reported holding $34.3 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $18.8 million position. Other investors bullish on the company included AQR Capital Management, Cheyne Capital, and Royce & Associates.
As one would reasonably expect, specific money managers have jumped into RadNet Inc. (NASDAQ:RDNT) headfirst. Tudor Investment Corp, managed by Paul Tudor Jones, created the largest position in RadNet Inc. (NASDAQ:RDNT). Tudor Investment Corp had $0.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is Roger Ibbotson’s Zebra Capital Management.
Let’s check out hedge fund activity in other stocks similar to RadNet Inc. (NASDAQ:RDNT). These stocks are Ascena Retail Group Inc (NASDAQ:ASNA), Teekay Offshore Partners L.P. (NYSE:TOO), Mechel PAO (NYSE:MTL), and Sinovac Biotech Ltd. (NASDAQ:SVA). This group of stocks’ market valuations are similar to RDNT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASNA | 16 | 78044 | -5 |
| TOO | 8 | 13953 | 1 |
| MTL | 4 | 697 | 1 |
| SVA | 4 | 77430 | 1 |
| Average | 8 | 42531 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $72 million in RDNT’s case. Ascena Retail Group Inc (NASDAQ:ASNA) is the most popular stock in this table. On the other hand Mechel PAO (NYSE:MTL) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on RDNT, though not to the same extent, as the stock returned 18.6% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
