There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Revlon Inc (NYSE:REV).
Hedge fund interest in Revlon Inc (NYSE:REV) 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 Ebix Inc (NASDAQ:EBIX), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), and OSI Systems, Inc. (NASDAQ:OSIS) to gather more data points.
In today’s marketplace there are dozens of gauges market participants can use to value publicly traded companies. A couple of the less known gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass the S&P 500 by a superb margin (see the details here).
We’re going to view the recent hedge fund action surrounding Revlon Inc (NYSE:REV).
How are hedge funds trading Revlon Inc (NYSE:REV)?
Heading into the first quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in REV a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Revlon Inc (NYSE:REV) was held by SCW Capital Management, which reported holding $29.7 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $26.8 million position. Other investors bullish on the company included Pzena Investment Management, Eversept Partners, and Millennium Management.
Since Revlon Inc (NYSE:REV) has faced falling interest from hedge fund managers, logic holds that there is a sect of money managers who sold off their positions entirely by the end of the third quarter. Interestingly, Jamie Zimmerman’s Litespeed Management said goodbye to the largest investment of the 700 funds watched by Insider Monkey, valued at about $31.6 million in stock. Mark Wolfson and Jamie Alexander’s fund, Jasper Ridge Partners, also dumped its stock, about $18.2 million worth. These bearish behaviors are interesting, 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 – not necessarily in the same industry as Revlon Inc (NYSE:REV) but similarly valued. These stocks are Ebix Inc (NASDAQ:EBIX), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), OSI Systems, Inc. (NASDAQ:OSIS), and GasLog Ltd (NYSE:GLOG). This group of stocks’ market values resemble REV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EBIX | 18 | 133327 | 2 |
| SBCF | 6 | 44504 | -3 |
| OSIS | 5 | 7212 | -4 |
| GLOG | 15 | 65743 | 5 |
| Average | 11 | 62697 | 0 |
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 $63 million. That figure was $180 million in REV’s case. Ebix Inc (NASDAQ:EBIX) is the most popular stock in this table. On the other hand OSI Systems, Inc. (NASDAQ:OSIS) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Revlon Inc (NYSE:REV) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately REV wasn’t nearly as popular as these 15 stock and hedge funds that were betting on REV were disappointed as the stock returned -23.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
