Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Rayonier Inc. (NYSE:RYN) .
Rayonier Inc. (NYSE:RYN) was in 15 hedge funds’ portfolios at the end of September. RYN investors should be aware of an increase in support from the world’s most successful money managers of late. There were 10 hedge funds in our database with RYN positions at the end of the previous 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 Urban Outfitters, Inc. (NASDAQ:URBN), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), and Texas Roadhouse Inc (NASDAQ:TXRH) to gather more data points.
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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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Hedge fund activity in Rayonier Inc. (NYSE:RYN)
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 50% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in RYN at the beginning of this year. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Mason Hawkins’ Southeastern Asset Management has the most valuable position in Rayonier Inc. (NYSE:RYN), worth close to $179.3 million, accounting for 1.7% of its total 13F portfolio. The second most bullish fund manager is Martin Whitman of Third Avenue Management, with a $95.4 million position; the fund has 4.4% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Jim Simons’ Renaissance Technologies, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that two of these hedge funds (Southeastern Asset Management and Impax Asset Management) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, key money managers have been driving this bullishness. Impax Asset Management, led by Ian Simm, assembled the biggest position in Rayonier Inc. (NYSE:RYN). Impax Asset Management had $12.1 million invested in the company at the end of the quarter. Thomas Bailard’s Bailard Inc also made a $0.6 million investment in the stock during the quarter. The other funds with brand new RYN positions are Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management, and Matthew Tewksbury’s Stevens Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Rayonier Inc. (NYSE:RYN) but similarly valued. We will take a look at Urban Outfitters, Inc. (NASDAQ:URBN), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Texas Roadhouse Inc (NASDAQ:TXRH), and Ubiquiti Networks Inc (NASDAQ:UBNT). All of these stocks’ market caps resemble RYN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| URBN | 25 | 271624 | 0 |
| TTWO | 46 | 1228866 | -1 |
| TXRH | 21 | 186122 | 7 |
| UBNT | 15 | 272438 | 1 |
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $490 million. That figure was $347 million in RYN’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Ubiquiti Networks Inc (NASDAQ:UBNT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Rayonier Inc. (NYSE:RYN) is even less popular than UBNT. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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