The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May as this time China pivoted and Trump put more pressure on China by increasing tariffs. Hedge funds’ top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 18.7% through May 30th, vs. a gain of 12.1% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards Regal Beloit Corporation (NYSE:RBC), and what that likely means for the prospects of the company and its stock.
Hedge fund interest in Regal Beloit Corporation (NYSE:RBC) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Chimera Investment Corporation (NYSE:CIM), Silicon Laboratories Inc. (NASDAQ:SLAB), and AU Optronics Corp. (NYSE:AUO) to gather more data points.
In today’s marketplace there are numerous metrics shareholders employ to assess their holdings. A pair of the most useful metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the broader indices by a very impressive amount (see the details here).
We’re going to take a peek at the latest hedge fund action encompassing Regal Beloit Corporation (NYSE:RBC).
What does smart money think about Regal Beloit Corporation (NYSE:RBC)?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in RBC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fisher Asset Management held the most valuable stake in Regal Beloit Corporation (NYSE:RBC), which was worth $48.1 million at the end of the first quarter. On the second spot was AQR Capital Management which amassed $28.5 million worth of shares. Moreover, Renaissance Technologies, Arrowstreet Capital, and GLG Partners were also bullish on Regal Beloit Corporation (NYSE:RBC), allocating a large percentage of their portfolios to this stock.
Due to the fact that Regal Beloit Corporation (NYSE:RBC) has faced bearish sentiment from hedge fund managers, it’s easy to see that there were a few money managers that decided to sell off their entire stakes heading into Q3. Intriguingly, Lee Ainslie’s Maverick Capital dumped the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $2.2 million in stock. Minhua Zhang’s fund, Weld Capital Management, also dumped its stock, about $0.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Regal Beloit Corporation (NYSE:RBC). These stocks are Chimera Investment Corporation (NYSE:CIM), Silicon Laboratories Inc. (NASDAQ:SLAB), AU Optronics Corp. (NYSE:AUO), and Liberty Latin America Ltd. (NASDAQ:LILA). This group of stocks’ market values match RBC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CIM | 10 | 117502 | -1 |
| SLAB | 12 | 40386 | -5 |
| AUO | 8 | 63727 | -1 |
| LILA | 14 | 163739 | 1 |
| Average | 11 | 96339 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $130 million in RBC’s case. Liberty Latin America Ltd. (NASDAQ:LILA) is the most popular stock in this table. On the other hand AU Optronics Corp. (NYSE:AUO) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Regal Beloit Corporation (NYSE:RBC) is more popular among hedge funds. 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 RBC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RBC were disappointed as the stock returned -2.3% 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 in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
