Is Rudolph Technologies Inc (NYSE:RTEC) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Rudolph Technologies Inc (NYSE:RTEC) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. 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 32 percentage points since May 2014 through March 12, 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.
We’re going to take a peek at the latest hedge fund action regarding Rudolph Technologies Inc (NYSE:RTEC).
How have hedgies been trading Rudolph Technologies Inc (NYSE:RTEC)?
At Q4’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RTEC over the last 14 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Rudolph Technologies Inc (NYSE:RTEC), with a stake worth $23.7 million reported as of the end of December. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $20.5 million. Royce & Associates, AQR Capital Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Rudolph Technologies Inc (NYSE:RTEC) has faced a decline in interest from hedge fund managers, logic holds that there is a sect of funds that elected to cut their positions entirely heading into Q3. Interestingly, J. Daniel Plants’s Voce Capital dropped the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling about $1.1 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund cut about $0.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds heading into Q3.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Rudolph Technologies Inc (NYSE:RTEC) but similarly valued. These stocks are Heska Corp (NASDAQ:HSKA), ORBCOMM Inc (NASDAQ:ORBC), Great Southern Bancorp, Inc. (NASDAQ:GSBC), and Yirendai Ltd. (NYSE:YRD). All of these stocks’ market caps are similar to RTEC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HSKA | 12 | 38485 | 2 |
| ORBC | 12 | 99614 | -3 |
| GSBC | 8 | 19470 | -1 |
| YRD | 3 | 5857 | -2 |
| Average | 8.75 | 40857 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $78 million in RTEC’s case. Heska Corp (NASDAQ:HSKA) is the most popular stock in this table. On the other hand Yirendai Ltd. (NYSE:YRD) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Rudolph Technologies Inc (NYSE:RTEC) 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. Hedge funds were also right about betting on RTEC, though not to the same extent, as the stock returned 20% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
