Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Rimini Street, Inc. (NASDAQ:RMNI) was in 6 hedge funds’ portfolios at the end of the second quarter of 2019. RMNI shareholders have witnessed an increase in support from the world’s most elite money managers recently. There were 4 hedge funds in our database with RMNI holdings at the end of the previous quarter. Our calculations also showed that RMNI isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most stock holders, hedge funds are perceived as slow, old investment vehicles of yesteryear. While there are over 8000 funds in operation today, Our experts look at the top tier of this club, around 750 funds. These investment experts manage most of all hedge funds’ total asset base, and by observing their inimitable picks, Insider Monkey has identified various investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. We’re going to view the new hedge fund action encompassing Rimini Street, Inc. (NASDAQ:RMNI).
How have hedgies been trading Rimini Street, Inc. (NASDAQ:RMNI)?
At Q2’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the previous quarter. By comparison, 1 hedge funds held shares or bullish call options in RMNI a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Kingstown Capital Management, managed by Michael Blitzer, holds the number one position in Rimini Street, Inc. (NASDAQ:RMNI). Kingstown Capital Management has a $6.1 million position in the stock, comprising 1.1% of its 13F portfolio. The second most bullish fund manager is Brett Hendrickson of Nokomis Capital, with a $5.1 million position; 1% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions consist of Renaissance Technologies, Israel Englander’s Millennium Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Now, key hedge funds have been driving this bullishness. Nokomis Capital, managed by Brett Hendrickson, created the most outsized position in Rimini Street, Inc. (NASDAQ:RMNI). Nokomis Capital had $5.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.2 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks similar to Rimini Street, Inc. (NASDAQ:RMNI). These stocks are Senseonics Holdings, Inc. (NYSE:SENS), Rafael Holdings, Inc. (NYSE:RFL), ImmunoGen, Inc. (NASDAQ:IMGN), and Noodles & Co (NASDAQ:NDLS). This group of stocks’ market values are closest to RMNI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SENS | 9 | 6408 | -1 |
| RFL | 6 | 55516 | -2 |
| IMGN | 15 | 61037 | -1 |
| NDLS | 12 | 89582 | -5 |
| Average | 10.5 | 53136 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $12 million in RMNI’s case. ImmunoGen, Inc. (NASDAQ:IMGN) is the most popular stock in this table. On the other hand Rafael Holdings, Inc. (NYSE:RFL) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Rimini Street, Inc. (NASDAQ:RMNI) is even less popular than RFL. Hedge funds dodged a bullet by taking a bearish stance towards RMNI. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately RMNI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); RMNI investors were disappointed as the stock returned -17.4% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
