We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Riverview Financial Corporation (NASDAQ:RIVE).
Is Riverview Financial Corporation (NASDAQ:RIVE) going to take off soon? The best stock pickers are getting more optimistic. The number of bullish hedge fund positions increased by 2 recently. Our calculations also showed that RIVE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). RIVE was in 5 hedge funds’ portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with RIVE holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are seen as unimportant, old investment vehicles of yesteryear. While there are more than 8000 funds in operation at present, Our experts look at the top tier of this group, approximately 750 funds. These hedge fund managers orchestrate most of the hedge fund industry’s total capital, and by tracking their matchless equity investments, Insider Monkey has formulated a number of investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example, Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind, we’re going to review the fresh hedge fund action surrounding Riverview Financial Corporation (NASDAQ:RIVE).
How have hedgies been trading Riverview Financial Corporation (NASDAQ:RIVE)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in RIVE a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Emanuel J. Friedman’s EJF Capital has the biggest position in Riverview Financial Corporation (NASDAQ:RIVE), worth close to $4.8 million, accounting for 0.7% of its total 13F portfolio. The second-largest stake is held by Tontine Asset Management, managed by Jeffrey Gendell, which holds a $2.7 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Israel Englander’s Millennium Management, David P. Cohen’s Minerva Advisors and Jim Simons (founder)’s Renaissance Technologies. In terms of the portfolio weights assigned to each position, EJF Capital allocated the biggest weight to Riverview Financial Corporation (NASDAQ:RIVE), around 0.65% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, earmarking 0.38 percent of its 13F equity portfolio to RIVE.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the largest position in Riverview Financial Corporation (NASDAQ:RIVE). Millennium Management had $1 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.1 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Riverview Financial Corporation (NASDAQ:RIVE) but similarly valued. These stocks are Menlo Therapeutics Inc. (NASDAQ:MNLO), Dean Foods Company (NYSE:DF), UTStarcom Holdings Corp (NASDAQ:UTSI), and Mogo Finance Technology Inc. (NASDAQ:MOGO). All of these stocks’ market caps are closest to RIVE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MNLO | 9 | 40281 | -1 |
| DF | 9 | 1672 | -1 |
| UTSI | 1 | 3451 | -1 |
| MOGO | 2 | 822 | 0 |
| Average | 5.25 | 11557 | -0.75 |
View the table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $9 million in RIVE’s case. Menlo Therapeutics Inc. (NASDAQ:MNLO) is the most popular stock in this table. On the other hand, UTStarcom Holdings Corp (NASDAQ:UTSI) is the least popular one with only 1 bullish hedge fund positions. Riverview Financial Corporation (NASDAQ:RIVE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately, RIVE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); RIVE investors were disappointed as the stock returned 1.1% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.