“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Rudolph Technologies Inc (NYSE:RTEC) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Is Rudolph Technologies Inc (NYSE:RTEC) a buy here? Investors who are in the know are turning less bullish. The number of long hedge fund bets dropped by 2 recently. Our calculations also showed that rtec isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s view the fresh hedge fund action encompassing Rudolph Technologies Inc (NYSE:RTEC).
How are hedge funds trading Rudolph Technologies Inc (NYSE:RTEC)?
At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards RTEC over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Rudolph Technologies Inc (NYSE:RTEC) was held by Renaissance Technologies, which reported holding $24.8 million worth of stock at the end of March. It was followed by D E Shaw with a $20.8 million position. Other investors bullish on the company included Royce & Associates, AQR Capital Management, and Two Sigma Advisors.
Due to the fact that Rudolph Technologies Inc (NYSE:RTEC) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedge funds that slashed their positions entirely last quarter. Interestingly, David Costen Haley’s HBK Investments dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, worth close to $1.1 million in call options. Ken Griffin’s fund, Citadel Investment Group, also sold off its call options, about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Rudolph Technologies Inc (NYSE:RTEC). These stocks are Voyager Therapeutics, Inc. (NASDAQ:VYGR), Eagle Pharmaceuticals Inc (NASDAQ:EGRX), Nova Measuring Instruments Ltd. (NASDAQ:NVMI), and Hanger, Inc. (NYSE:HNGR). All of these stocks’ market caps resemble RTEC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VYGR | 18 | 153216 | 0 |
| EGRX | 23 | 164998 | 2 |
| NVMI | 11 | 105109 | 2 |
| HNGR | 22 | 155181 | 4 |
| Average | 18.5 | 144626 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $83 million in RTEC’s case. Eagle Pharmaceuticals Inc (NASDAQ:EGRX) is the most popular stock in this table. On the other hand Nova Measuring Instruments Ltd. (NASDAQ:NVMI) is the least popular one with only 11 bullish hedge fund positions. Rudolph Technologies Inc (NYSE:RTEC) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on RTEC as the stock returned 7.6% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
