Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Radian Group Inc (NYSE:RDN), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Radian Group Inc (NYSE:RDN) shareholders have witnessed an increase in support from the world’s most elite money managers lately. Radian Group Inc (NYSE:RDN) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 33. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RDN 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Frank Brosens of Taconic Capital
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. With all of this in mind we’re going to take a glance at the recent hedge fund action surrounding Radian Group Inc (NYSE:RDN).
Do Hedge Funds Think RDN Is A Good Stock To Buy Now?
At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the second quarter of 2020. On the other hand, there were a total of 24 hedge funds with a bullish position in RDN a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Radian Group Inc (NYSE:RDN) was held by Rima Senvest Management, which reported holding $60.1 million worth of stock at the end of September. It was followed by King Street Capital with a $44.9 million position. Other investors bullish on the company included Redwood Capital Management, Arrowstreet Capital, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Callodine Capital Management allocated the biggest weight to Radian Group Inc (NYSE:RDN), around 10.15% of its 13F portfolio. King Street Capital is also relatively very bullish on the stock, dishing out 4.47 percent of its 13F equity portfolio to RDN.
Now, some big names have been driving this bullishness. King Street Capital, managed by Brian J. Higgins, initiated the most outsized position in Radian Group Inc (NYSE:RDN). King Street Capital had $44.9 million invested in the company at the end of the quarter. Jonathan Kolatch’s Redwood Capital Management also initiated a $36.7 million position during the quarter. The other funds with brand new RDN positions are Frank Brosens’s Taconic Capital, Mike Vranos’s Ellington, and Jinghua Yan’s TwinBeech Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Radian Group Inc (NYSE:RDN). These stocks are Triton International Limited (NYSE:TRTN), Select Medical Holdings Corporation (NYSE:SEM), Laureate Education, Inc. (NASDAQ:LAUR), United Bankshares, Inc. (NASDAQ:UBSI), FireEye Inc (NASDAQ:FEYE), Trupanion Inc (NASDAQ:TRUP), and Mantech International Corp (NASDAQ:MANT). This group of stocks’ market caps match RDN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRTN | 16 | 164268 | 2 |
| SEM | 22 | 114598 | 0 |
| LAUR | 25 | 225833 | -6 |
| UBSI | 19 | 39243 | 3 |
| FEYE | 28 | 162203 | 0 |
| TRUP | 12 | 265969 | -3 |
| MANT | 17 | 20372 | 1 |
| Average | 19.9 | 141784 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $301 million in RDN’s case. FireEye Inc (NASDAQ:FEYE) is the most popular stock in this table. On the other hand Trupanion Inc (NASDAQ:TRUP) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Radian Group Inc (NYSE:RDN) is more popular among hedge funds. Our overall hedge fund sentiment score for RDN is 90. 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 returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on RDN as the stock returned 37.3% since the end of September (through 12/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
