“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Rambus Inc. (NASDAQ:RMBS).
Is Rambus Inc. (NASDAQ:RMBS) worth your attention right now? The best stock pickers are taking a bullish view. The number of long hedge fund positions rose by 4 in recent months. Our calculations also showed that rmbs isn’t among the 30 most popular stocks among hedge funds.
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 fresh hedge fund action encompassing Rambus Inc. (NASDAQ:RMBS).
How have hedgies been trading Rambus Inc. (NASDAQ:RMBS)?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the fourth quarter of 2018. By comparison, 14 hedge funds held shares or bullish call options in RMBS a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Rambus Inc. (NASDAQ:RMBS) was held by Renaissance Technologies, which reported holding $49.5 million worth of stock at the end of March. It was followed by Lynrock Lake with a $33.5 million position. Other investors bullish on the company included D E Shaw, Two Sigma Advisors, and Citadel Investment Group.
As one would reasonably expect, specific money managers have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Rambus Inc. (NASDAQ:RMBS). ExodusPoint Capital had $0.6 million invested in the company at the end of the quarter. Hoon Kim’s Quantinno Capital also made a $0.4 million investment in the stock during the quarter. The other funds with brand new RMBS positions are Chuck Royce’s Royce & Associates, Cliff Asness’s AQR Capital Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s go over hedge fund activity in other stocks similar to Rambus Inc. (NASDAQ:RMBS). These stocks are Xperi Corporation (NASDAQ:XPER), Brookline Bancorp, Inc. (NASDAQ:BRKL), Electronics For Imaging, Inc. (NASDAQ:EFII), and American Finance Trust, Inc. (NASDAQ:AFIN). This group of stocks’ market caps are similar to RMBS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XPER | 23 | 119653 | 8 |
| BRKL | 9 | 52358 | -1 |
| EFII | 15 | 140481 | 3 |
| AFIN | 9 | 16313 | 6 |
| Average | 14 | 82201 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $138 million in RMBS’s case. Xperi Corporation (NASDAQ:XPER) is the most popular stock in this table. On the other hand Brookline Bancorp, Inc. (NASDAQ:BRKL) is the least popular one with only 9 bullish hedge fund positions. Rambus Inc. (NASDAQ:RMBS) 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 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 RMBS as the stock returned 12.8% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
