Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
RBC Bearings Incorporated (NASDAQ:ROLL) investors should be aware of an increase in support from the world’s most successful money managers recently. There were 7 hedge funds in our database with ROLL positions at the end of the second quarter, 3 fewer than there were a quarter later. At the end of this article we will also compare ROLL to other stocks including Forum Energy Technologies Inc (NYSE:FET), The Advisory Board Company (NASDAQ:ABCO), and Main Street Capital Corporation (NYSE:MAIN) to get a better sense of its popularity.
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 RBC Bearings Incorporated (NASDAQ:ROLL)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a 43% climb from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in ROLL at the beginning of this year, which has since leapt by 100%. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in RBC Bearings Incorporated (NASDAQ:ROLL), worth close to $66.7 million. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $3.6 million position. Remaining members of the smart money that are bullish include Paul Marshall and Ian Wace’s Marshall Wace LLP, Ken Griffin’s Citadel Investment Group, and Joel Greenblatt’s Gotham Asset Management. 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.
Now, some big names have jumped into RBC Bearings Incorporated (NASDAQ:ROLL) headfirst. Marshall Wace LLP created the biggest position in RBC Bearings Incorporated (NASDAQ:ROLL). Marshall Wace LLP had $1.9 million invested in the company at the end of the quarter. David E. Shaw’s D E Shaw also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new ROLL investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as RBC Bearings Incorporated (NASDAQ:ROLL) but similarly valued. These stocks are Forum Energy Technologies Inc (NYSE:FET), The Advisory Board Company (NASDAQ:ABCO), Main Street Capital Corporation (NYSE:MAIN), and GATX Corporation (NYSE:GATX). This group of stocks’ market caps resemble ROLL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FET | 16 | 79616 | 3 |
| ABCO | 10 | 127871 | -5 |
| MAIN | 8 | 14735 | 2 |
| GATX | 11 | 174818 | -1 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $77 million in ROLL’s case. Forum Energy Technologies Inc (NYSE:FET) is the most popular stock in this table. On the other hand Main Street Capital Corporation (NYSE:MAIN) is the least popular one with only 8 bullish hedge fund positions. RBC Bearings Incorporated (NASDAQ:ROLL) 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 FET might be a better candidate to consider taking a long position in.
Disclosure: None
