Is Renewable Energy Group Inc (NASDAQ:REGI) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
Is Renewable Energy Group Inc (NASDAQ:REGI) a bargain? Hedge funds are getting more bullish. The number of long hedge fund positions improved by 8 recently. Our calculations also showed that REGI isn’t among the 30 most popular stocks among hedge funds. REGI was in 21 hedge funds’ portfolios at the end of the third quarter of 2018. There were 13 hedge funds in our database with REGI holdings at the end of the previous quarter.
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 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 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.
Let’s take a glance at the key hedge fund action encompassing Renewable Energy Group Inc (NASDAQ:REGI).
How have hedgies been trading Renewable Energy Group Inc (NASDAQ:REGI)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 62% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards REGI over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Renewable Energy Group Inc (NASDAQ:REGI) was held by GLG Partners, which reported holding $18.8 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $15.4 million position. Other investors bullish on the company included Millennium Management, Point72 Asset Management, and Leucadia National.
As one would reasonably expect, some big names have jumped into Renewable Energy Group Inc (NASDAQ:REGI) headfirst. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Renewable Energy Group Inc (NASDAQ:REGI). Point72 Asset Management had $12.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $3.5 million position during the quarter. The following funds were also among the new REGI investors: Joel Greenblatt’s Gotham Asset Management, Ed Bosek’s BeaconLight Capital, and Jeffrey Talpins’s Element Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Renewable Energy Group Inc (NASDAQ:REGI) but similarly valued. These stocks are Stewart Information Services Corp (NYSE:STC), The Andersons, Inc. (NASDAQ:ANDE), Glu Mobile Inc. (NASDAQ:GLUU), and KEMET Corporation (NYSE:KEM). This group of stocks’ market values match REGI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STC | 20 | 148447 | 0 |
| ANDE | 8 | 62037 | 0 |
| GLUU | 22 | 115892 | 2 |
| KEM | 20 | 129835 | 1 |
| Average | 17.5 | 114053 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $83 million in REGI’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand The Andersons, Inc. (NASDAQ:ANDE) is the least popular one with only 8 bullish hedge fund positions. Renewable Energy Group Inc (NASDAQ:REGI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GLUU might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
