Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Renasant Corporation (NASDAQ:RNST).
Renasant Corporation (NASDAQ:RNST) investors should pay attention to an increase in enthusiasm from smart money lately. RNST was in 16 hedge funds’ portfolios at the end of the first quarter of 2019. There were 13 hedge funds in our database with RNST positions at the end of the previous quarter. Our calculations also showed that RNST isn’t among the 30 most popular stocks among hedge funds.
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 check out the fresh hedge fund action regarding Renasant Corporation (NASDAQ:RNST).
Hedge fund activity in Renasant Corporation (NASDAQ:RNST)
Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the fourth quarter of 2018. By comparison, 12 hedge funds held shares or bullish call options in RNST 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.
Of the funds tracked by Insider Monkey, Jim Simons’s Renaissance Technologies has the largest position in Renasant Corporation (NASDAQ:RNST), worth close to $19.4 million, corresponding to less than 0.1%% of its total 13F portfolio. The second largest stake is held by GLG Partners, led by Noam Gottesman, holding a $4.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions contain Chuck Royce’s Royce & Associates, Paul Hondros’s AlphaOne Capital Partners and Ken Griffin’s Citadel Investment Group.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, established the most valuable position in Renasant Corporation (NASDAQ:RNST). GLG Partners had $4.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.3 million investment in the stock during the quarter. The following funds were also among the new RNST investors: Michael Gelband’s ExodusPoint Capital, Dmitry Balyasny’s Balyasny Asset Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Renasant Corporation (NASDAQ:RNST). We will take a look at Bank of N.T. Butterfield & Son Limited (The) (NYSE:NTB), Retail Opportunity Investments Corp (NASDAQ:ROIC), Otter Tail Corporation (NASDAQ:OTTR), and Alamos Gold Inc (NYSE:AGI). All of these stocks’ market caps are similar to RNST’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NTB | 15 | 128157 | -1 |
| ROIC | 8 | 57661 | -2 |
| OTTR | 10 | 72052 | -2 |
| AGI | 12 | 136451 | 1 |
| Average | 11.25 | 98580 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $36 million in RNST’s case. Bank of N.T. Butterfield & Son Limited (The) (NYSE:NTB) is the most popular stock in this table. On the other hand Retail Opportunity Investments Corp (NASDAQ:ROIC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Renasant Corporation (NASDAQ:RNST) 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. Hedge funds were also right about betting on RNST as the stock returned 7.9% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
