We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like B. Riley Financial, Inc. (NASDAQ:RILY).
B. Riley Financial, Inc. (NASDAQ:RILY) was in 14 hedge funds’ portfolios at the end of September. RILY has experienced an increase in enthusiasm from smart money of late. There were 10 hedge funds in our database with RILY positions at the end of the previous quarter. Our calculations also showed that RILY 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.
To the average investor there are a multitude of gauges investors can use to assess their holdings. A pair of the most innovative gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a very impressive amount (see the details here).
Paul Singer of Elliott 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. Let’s take a look at the latest hedge fund action surrounding B. Riley Financial, Inc. (NASDAQ:RILY).
What have hedge funds been doing with B. Riley Financial, Inc. (NASDAQ:RILY)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RILY over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Paul Singer’s Elliott Management has the largest position in B. Riley Financial, Inc. (NASDAQ:RILY), worth close to $54.5 million, corresponding to 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Brett Hendrickson of Nokomis Capital, with a $35 million position; the fund has 7.6% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism contain Chuck Royce’s Royce & Associates, Paul Tudor Jones’s Tudor Investment Corp and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Nokomis Capital allocated the biggest weight to B. Riley Financial, Inc. (NASDAQ:RILY), around 7.57% of its 13F portfolio. Cruiser Capital Advisors is also relatively very bullish on the stock, dishing out 0.78 percent of its 13F equity portfolio to RILY.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Renaissance Technologies established the biggest position in B. Riley Financial, Inc. (NASDAQ:RILY). Renaissance Technologies had $0.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.3 million position during the quarter. The following funds were also among the new RILY investors: Cliff Asness’s AQR Capital Management, Matthew Hulsizer’s PEAK6 Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as B. Riley Financial, Inc. (NASDAQ:RILY) but similarly valued. We will take a look at Luther Burbank Corporation (NASDAQ:LBC), Voyager Therapeutics, Inc. (NASDAQ:VYGR), Keane Group, Inc. (NYSE:FRAC), and Midland States Bancorp, Inc. (NASDAQ:MSBI). This group of stocks’ market values match RILY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LBC | 7 | 10312 | 0 |
| VYGR | 16 | 107789 | -2 |
| FRAC | 23 | 346467 | 2 |
| MSBI | 7 | 5828 | 1 |
| Average | 13.25 | 117599 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $119 million in RILY’s case. Keane Group, Inc. (NYSE:FRAC) is the most popular stock in this table. On the other hand Luther Burbank Corporation (NASDAQ:LBC) is the least popular one with only 7 bullish hedge fund positions. B. Riley Financial, Inc. (NASDAQ:RILY) 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 RILY as the stock returned 26.5% 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.
