How RadiSys Corporation (RSYS) Stacks Up Against Its Peers

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Is RadiSys Corporation (NASDAQ:RSYS) the right pick for your portfolio? Money managers are definitely reducing their bets on the stock. The number of bullish hedge fund bets that are revealed through 13F filings was slashed by 2 lately. RSYS was in 7 hedge funds’ portfolios at the end of the third quarter of 2016. There were 9 hedge funds in our database with RSYS holdings at the end of the second quarter. 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 Navios Maritime Acquisition Corp (NYSE:NNA), Bellatrix Exploration Ltd Ordinary Shares (Canada) (NYSEAMEX:BXE), and Global Sources Ltd. (Bermuda) (NASDAQ:GSOL) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What does the smart money think about RadiSys Corporation (NASDAQ:RSYS)?

At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a 22% fall from the second quarter of 2016. The graph below displays the number of hedge funds with bullish positions in RSYS over the last 5 quarters, which peaked at the end of Q1 and has fallen by 30% since. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, has the number one position in RadiSys Corporation (NASDAQ:RSYS), worth close to $12.2 million. On Renaissance Technologies’ heels is Royce & Associates, led by Chuck Royce, which holds a $4.9 million position. Remaining professional money managers with similar optimism include Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Josh Goldberg’s G2 Investment Partners Management, and Brian C. Freckmann’s Lyon Street Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually said goodbye to their positions entirely. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the biggest investment of the “upper crust” of funds watched by Insider Monkey, comprising close to $0.3 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund dropped about $0.1 million worth of shares.

Let’s also examine hedge fund activity in other stocks similar to RadiSys Corporation (NASDAQ:RSYS). We will take a look at Navios Maritime Acquisition Corp (NYSE:NNA), Bellatrix Exploration Ltd Ordinary Shares (Canada) (NYSEAMEX:BXE), Global Sources Ltd. (Bermuda) (NASDAQ:GSOL), and First Business Financial Services Inc (NASDAQ:FBIZ). This group of stocks’ market caps resemble RSYS’s market cap.

As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $22 million in RSYS’s case. Bellatrix Exploration Ltd Ordinary Shares (Canada) (NYSEAMEX:BXE) is the most popular stock in this table. On the other hand First Business Financial Services Inc (NASDAQ:FBIZ) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks RadiSys Corporation (NASDAQ:RSYS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None