After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Ready Capital Corporation (NYSE:RC).
Is Ready Capital Corporation (NYSE:RC) worth your attention right now? Investors who are in the know are betting on the stock. The number of bullish hedge fund bets rose by 8 recently. Our calculations also showed that RC isn’t among the 30 most popular stocks among hedge funds. RC was in 14 hedge funds’ portfolios at the end of March. There were 6 hedge funds in our database with RC holdings at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s view the fresh hedge fund action regarding Ready Capital Corporation (NYSE:RC).
What does smart money think about Ready Capital Corporation (NYSE:RC)?
Heading into the second quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 133% from the fourth quarter of 2018. By comparison, 4 hedge funds held shares or bullish call options in RC a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Farallon Capital held the most valuable stake in Ready Capital Corporation (NYSE:RC), which was worth $32.9 million at the end of the first quarter. On the second spot was Almitas Capital which amassed $9.8 million worth of shares. Moreover, Nantahala Capital Management, Weiss Asset Management, and Millennium Management were also bullish on Ready Capital Corporation (NYSE:RC), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers have been driving this bullishness. Almitas Capital, managed by Ron Mass, assembled the largest position in Ready Capital Corporation (NYSE:RC). Almitas Capital had $9.8 million invested in the company at the end of the quarter. Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management also initiated a $9.5 million position during the quarter. The other funds with new positions in the stock are Andrew Weiss’s Weiss Asset Management, Michael Gelband’s ExodusPoint Capital, and David Harding’s Winton Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ready Capital Corporation (NYSE:RC) but similarly valued. These stocks are Petmed Express Inc (NASDAQ:PETS), Corenergy Infrastructure Trust Inc (NYSE:CORR), PennantPark Investment Corp. (NASDAQ:PNNT), and Dynavax Technologies Corporation (NASDAQ:DVAX). This group of stocks’ market valuations are similar to RC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PETS | 16 | 74107 | 1 |
| CORR | 11 | 43465 | 4 |
| PNNT | 9 | 13823 | 0 |
| DVAX | 16 | 85298 | -2 |
| Average | 13 | 54173 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $63 million in RC’s case. Petmed Express Inc (NASDAQ:PETS) is the most popular stock in this table. On the other hand PennantPark Investment Corp. (NASDAQ:PNNT) is the least popular one with only 9 bullish hedge fund positions. Ready Capital Corporation (NYSE:RC) 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 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. Unfortunately RC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RC were disappointed as the stock returned 3.6% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
