Is Rambus Inc. (RMBS) A Good Stock To Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Rambus Inc. (NASDAQ:RMBS).

Is RMBS a good stock to buy now? Rambus Inc. (NASDAQ:RMBS) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 24. RMBS has seen an increase in hedge fund interest in recent months. There were 20 hedge funds in our database with RMBS holdings at the end of June. Our calculations also showed that RMBS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind we’re going to take a glance at the recent hedge fund action surrounding Rambus Inc. (NASDAQ:RMBS).

David E. Shaw of D.E. Shaw

Do Hedge Funds Think RMBS Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the second quarter of 2021. By comparison, 19 hedge funds held shares or bullish call options in RMBS a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Rambus Inc. (NASDAQ:RMBS) was held by Lynrock Lake, which reported holding $170.2 million worth of stock at the end of September. It was followed by D E Shaw with a $33.2 million position. Other investors bullish on the company included Lynrock Lake, Millennium Management, and Shannon River Fund Management. In terms of the portfolio weights assigned to each position Barington Capital Group allocated the biggest weight to Rambus Inc. (NASDAQ:RMBS), around 12.22% of its 13F portfolio. Lynrock Lake is also relatively very bullish on the stock, designating 10.5 percent of its 13F equity portfolio to RMBS.

Consequently, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most outsized position in Rambus Inc. (NASDAQ:RMBS). Arrowstreet Capital had $1.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.7 million position during the quarter. The other funds with brand new RMBS positions are Paul Tudor Jones’s Tudor Investment Corp, Peter Muller’s PDT Partners, and Noam Gottesman’s GLG Partners.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Rambus Inc. (NASDAQ:RMBS) but similarly valued. These stocks are Taro Pharmaceutical Industries Ltd. (NYSE:TARO), Mueller Water Products, Inc. (NYSE:MWA), Comstock Resources Inc (NYSE:CRK), Silicon Motion Technology Corp. (NASDAQ:SIMO), Yatsen Holding Limited (NYSE:YSG), Xometry Inc. (NASDAQ:XMTR), and Sinclair Broadcast Group, Inc. (NASDAQ:SBGI). This group of stocks’ market values match RMBS’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $322 million in RMBS’s case. Comstock Resources Inc (NYSE:CRK) is the most popular stock in this table. On the other hand Taro Pharmaceutical Industries Ltd. (NYSE:TARO) is the least popular one with only 5 bullish hedge fund positions. Rambus Inc. (NASDAQ:RMBS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RMBS is 74.4. 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. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on RMBS as the stock returned 32.4% since the end of Q3 (through 12/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.