It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 24.4% during the first 9 months of 2019 and outperformed the S&P 500 ETF by 4 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Regis Corporation (NYSE:RGS) changed during the first quarter.
Regis Corporation (NYSE:RGS) has experienced a decrease in activity from the world’s largest hedge funds recently. Our calculations also showed that RGS isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the new hedge fund action surrounding Regis Corporation (NYSE:RGS).
What have hedge funds been doing with Regis Corporation (NYSE:RGS)?
At the end of the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the first quarter of 2019. By comparison, 14 hedge funds held shares or bullish call options in RGS 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.
Among these funds, Birch Run Capital held the most valuable stake in Regis Corporation (NYSE:RGS), which was worth $176.9 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $35.6 million worth of shares. Moreover, First Pacific Advisors LLC, 1060 Capital Management, and D E Shaw were also bullish on Regis Corporation (NYSE:RGS), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Regis Corporation (NYSE:RGS) has experienced bearish sentiment from hedge fund managers, logic holds that there is a sect of fund managers that elected to cut their full holdings last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group sold off the biggest position of the 750 funds monitored by Insider Monkey, comprising close to $2.8 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also dropped its stock, about $0.3 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to Regis Corporation (NYSE:RGS). These stocks are Retail Value Inc. (NYSE:RVI), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), Peoples Bancorp Inc. (NASDAQ:PEBO), and Globalstar, Inc. (NYSE:GSAT). This group of stocks’ market values resemble RGS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RVI | 17 | 78786 | 0 |
| LXRX | 11 | 18702 | -1 |
| PEBO | 7 | 26726 | -2 |
| GSAT | 13 | 112559 | -2 |
| Average | 12 | 59193 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $245 million in RGS’s case. Retail Value Inc. (NYSE:RVI) is the most popular stock in this table. On the other hand Peoples Bancorp Inc. (NASDAQ:PEBO) is the least popular one with only 7 bullish hedge fund positions. Regis Corporation (NYSE:RGS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on RGS as the stock returned 21.8% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
