Here is What Hedge Funds Think About Rent-A-Center Inc (RCII)

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Rent-A-Center Inc (NASDAQ:RCII) changed recently.

Is Rent-A-Center Inc (NASDAQ:RCII) going to take off soon? Hedge funds were reducing their bets on the stock. The number of long hedge fund positions went down by 1 lately. Rent-A-Center Inc (NASDAQ:RCII) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 29. Our calculations also showed that RCII isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 29 hedge funds in our database with RCII holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a gander at the key hedge fund action regarding Rent-A-Center Inc (NASDAQ:RCII).

Glenn Welling of Engaged Capital

Do Hedge Funds Think RCII Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in RCII a year ago. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Glenn W. Welling’s Engaged Capital has the largest position in Rent-A-Center Inc (NASDAQ:RCII), worth close to $132.4 million, corresponding to 9.5% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $68.8 million position; 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish encompass Chuck Royce’s Royce & Associates, Parsa Kiai’s Steamboat Capital Partners and Anand Parekh’s Alyeska Investment Group. In terms of the portfolio weights assigned to each position Engaged Capital allocated the biggest weight to Rent-A-Center Inc (NASDAQ:RCII), around 9.51% of its 13F portfolio. Steamboat Capital Partners is also relatively very bullish on the stock, dishing out 6.02 percent of its 13F equity portfolio to RCII.

Seeing as Rent-A-Center Inc (NASDAQ:RCII) has faced a decline in interest from hedge fund managers, it’s safe to say that there exists a select few hedge funds that decided to sell off their positions entirely last quarter. At the top of the heap, Christopher Hillary’s Roubaix Capital said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, totaling about $4 million in stock. Jinghua Yan’s fund, TwinBeech Capital, also dropped its stock, about $3 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Rent-A-Center Inc (NASDAQ:RCII) but similarly valued. We will take a look at Allison Transmission Holdings Inc (NYSE:ALSN), Freedom Holding Corp. (NASDAQ:FRHC), Livent Corporation (NYSE:LTHM), Ormat Technologies, Inc. (NYSE:ORA), Sunoco LP (NYSE:SUN), Ryan Specialty Group Holdings Inc. (NYSE:RYAN), and KnowBe4 Inc. (NASDAQ:KNBE). This group of stocks’ market caps are closest to RCII’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $250 million. That figure was $379 million in RCII’s case. Allison Transmission Holdings Inc (NYSE:ALSN) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 2 bullish hedge fund positions. Rent-A-Center Inc (NASDAQ:RCII) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RCII is 83. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately RCII wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RCII were disappointed as the stock returned -9.8% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.