Is RCI A Good Stock To Buy Now?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Rogers Communications Inc. (NYSE:RCI).

Is RCI a good stock to buy now? Hedge funds were reducing their bets on the stock. The number of bullish hedge fund bets dropped by 1 recently. Rogers Communications Inc. (NYSE:RCI) was in 15 hedge funds’ portfolios at the end of September. The all time high for this statistic is 23. Our calculations also showed that RCI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Minhua Zhang of Weld Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s take a look at the key hedge fund action regarding Rogers Communications Inc. (NYSE:RCI).

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

At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RCI over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Rogers Communications Inc. (NYSE:RCI), which was worth $161.8 million at the end of the third quarter. On the second spot was Galibier Capital Management which amassed $38.7 million worth of shares. GAMCO Investors, GLG Partners, and D E Shaw 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 Galibier Capital Management allocated the biggest weight to Rogers Communications Inc. (NYSE:RCI), around 9.1% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, designating 0.21 percent of its 13F equity portfolio to RCI.

Judging by the fact that Rogers Communications Inc. (NYSE:RCI) has faced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds that elected to cut their entire stakes in the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest investment of the 750 funds monitored by Insider Monkey, totaling an estimated $1.2 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Rogers Communications Inc. (NYSE:RCI) but similarly valued. These stocks are FleetCor Technologies, Inc. (NYSE:FLT), China Unicom (Hong Kong) Limited (NYSE:CHU), AmerisourceBergen Corporation (NYSE:ABC), Simon Property Group, Inc (NYSE:SPG), Entergy Corporation (NYSE:ETR), Immunomedics, Inc. (NASDAQ:IMMU), and Incyte Corporation (NASDAQ:INCY). This group of stocks’ market caps resemble RCI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1984 million. That figure was $264 million in RCI’s case. Immunomedics, Inc. (NASDAQ:IMMU) is the most popular stock in this table. On the other hand China Unicom (Hong Kong) Limited (NYSE:CHU) is the least popular one with only 6 bullish hedge fund positions. Rogers Communications Inc. (NYSE:RCI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RCI is 29.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on RCI as the stock returned 20% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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