Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of December. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) has seen an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that RUTH isn’t among the 30 most popular stocks among hedge funds.
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.
We’re going to take a glance at the key hedge fund action surrounding Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH).
How have hedgies been trading Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH)?
At Q4’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RUTH over the last 14 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Cliff Asness’s AQR Capital Management has the most valuable position in Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH), worth close to $10 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $9.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish comprise Noam Gottesman’s GLG Partners, John Overdeck and David Siegel’s Two Sigma Advisors and Jim Simons’s Renaissance Technologies.
As one would reasonably expect, key money managers were breaking ground themselves. Blue Mountain Capital, managed by Andrew Feldstein and Stephen Siderow, assembled the largest position in Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH). Blue Mountain Capital had $1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.6 million position during the quarter. The other funds with brand new RUTH positions are Minhua Zhang’s Weld Capital Management, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and David Costen Haley’s HBK Investments.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) but similarly valued. These stocks are Alder Biopharmaceuticals Inc (NASDAQ:ALDR), Hanger, Inc. (NYSE:HNGR), Kraton Corporation (NYSE:KRA), and New Media Investment Group Inc (NYSE:NEWM). This group of stocks’ market caps match RUTH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALDR | 15 | 207447 | -1 |
| HNGR | 18 | 193919 | 1 |
| KRA | 17 | 50586 | -5 |
| NEWM | 17 | 35940 | -3 |
| Average | 16.75 | 121973 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $50 million in RUTH’s case. Hanger, Inc. (NYSE:HNGR) is the most popular stock in this table. On the other hand Alder Biopharmaceuticals Inc (NASDAQ:ALDR) is the least popular one with only 15 bullish hedge fund positions. Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately RUTH wasn’t nearly as popular as these 15 stock and hedge funds that were betting on RUTH were disappointed as the stock returned 12.5% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
