Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
RadiSys Corporation (NASDAQ:RSYS) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September. 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 Energy XXI (Bermuda) Limited (NASDAQ:EXXI), VAALCO Energy, Inc. (NYSE:EGY), and ReneSola Ltd. (ADR) (NYSE:SOL) to gather more data points.
Follow Radisys Corp (NASDAQ:RSYS)
Follow Radisys Corp (NASDAQ:RSYS)
At the moment there are a multitude of indicators stock market investors have at their disposal to value stocks. Some of the most innovative indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the market by a solid amount (see the details here).
Keeping this in mind, we’re going to take a gander at the recent action surrounding RadiSys Corporation (NASDAQ:RSYS).
How have hedgies been trading RadiSys Corporation (NASDAQ:RSYS)?
Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, David Nierenberg’s Nierenberg Investment Management has the most valuable position in RadiSys Corporation (NASDAQ:RSYS), worth close to $9.4 million, accounting for 13.6% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, led by Jim Simons, holding a $4.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions include Paul Solit’s Potomac Capital Management, Chuck Royce’s Royce & Associates and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Balyasny Asset Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Algert Coldiron Investors).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as RadiSys Corporation (NASDAQ:RSYS) but similarly valued. We will take a look at Energy XXI (Bermuda) Limited (NASDAQ:EXXI), VAALCO Energy, Inc. (NYSE:EGY), ReneSola Ltd. (ADR) (NYSE:SOL), and Neonode, Inc (NASDAQ:NEON). This group of stocks’ market valuations are closest to RSYS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXXI | 14 | 11408 | -4 |
| EGY | 7 | 2938 | -6 |
| SOL | 4 | 5334 | 0 |
| NEON | 6 | 3213 | -1 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $6 million, which is lower than the $20 million figure in RSYS’s case. Energy XXI (Bermuda) Limited (NASDAQ:EXXI) is the most popular stock in this table with 14 funds holding shares. On the other hand, ReneSola Ltd. (ADR) (NYSE:SOL) is the least popular one with only 4 bullish hedge fund positions. RadiSys Corporation (NASDAQ:RSYS) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EXXI might be a better candidate to consider a long position.
