Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in LiveRamp Holdings, Inc. (NYSE:RAMP)? The smart money sentiment can provide an answer to this question.
Is LiveRamp Holdings, Inc. (NYSE:RAMP) a superb investment today? The smart money was getting more optimistic. The number of bullish hedge fund bets moved up by 2 recently. LiveRamp Holdings, Inc. (NYSE:RAMP) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic is 28. Our calculations also showed that RAMP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 S&P 500 ETFs by 115 percentage points since March 2017 (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.
Robert G. Moses of RGM Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s analyze the key hedge fund action surrounding LiveRamp Holdings, Inc. (NYSE:RAMP).
Do Hedge Funds Think RAMP Is A Good Stock To Buy Now?
At the end of March, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RAMP over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, RGM Capital was the largest shareholder of LiveRamp Holdings, Inc. (NYSE:RAMP), with a stake worth $113.2 million reported as of the end of March. Trailing RGM Capital was Renaissance Technologies, which amassed a stake valued at $37.9 million. Vista Equity Partners, Islet Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position RGM Capital allocated the biggest weight to LiveRamp Holdings, Inc. (NYSE:RAMP), around 4.95% of its 13F portfolio. Washington Harbour Partners is also relatively very bullish on the stock, setting aside 1.85 percent of its 13F equity portfolio to RAMP.
As industrywide interest jumped, key money managers have been driving this bullishness. Renaissance Technologies, established the biggest position in LiveRamp Holdings, Inc. (NYSE:RAMP). Renaissance Technologies had $37.9 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also initiated a $18.2 million position during the quarter. The other funds with brand new RAMP positions are Mina Faltas’s Washington Harbour Partners, Dmitry Balyasny’s Balyasny Asset Management, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to LiveRamp Holdings, Inc. (NYSE:RAMP). These stocks are First Majestic Silver Corp (NYSE:AG), White Mountains Insurance Group Ltd (NYSE:WTM), Intercorp Financial Services Inc. (NYSE:IFS), Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), Meritage Homes Corp (NYSE:MTH), iRobot Corporation (NASDAQ:IRBT), and Blackbaud, Inc. (NASDAQ:BLKB). This group of stocks’ market values are similar to RAMP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AG | 15 | 54788 | 3 |
| WTM | 19 | 304951 | 3 |
| IFS | 5 | 35452 | -1 |
| APLS | 34 | 696117 | -1 |
| MTH | 23 | 335864 | -7 |
| IRBT | 17 | 148076 | -5 |
| BLKB | 20 | 109333 | 1 |
| Average | 19 | 240654 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $241 million. That figure was $300 million in RAMP’s case. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is the most popular stock in this table. On the other hand Intercorp Financial Services Inc. (NYSE:IFS) is the least popular one with only 5 bullish hedge fund positions. LiveRamp Holdings, Inc. (NYSE:RAMP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RAMP is 71.1. 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 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately RAMP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RAMP were disappointed as the stock returned -15.4% since the end of March (through 7/9) 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.
Follow Liveramp Holdings Inc. (NYSE:RAMP)
Follow Liveramp Holdings Inc. (NYSE:RAMP)
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Disclosure: None. This article was originally published at Insider Monkey.
