Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Renewable Energy Group Inc (NASDAQ:REGI) .
Is Renewable Energy Group Inc (NASDAQ:REGI) a cheap stock to buy now? Money managers are selling. The number of long hedge fund bets fell by 2 in recent months. REGIwas in 15 hedge funds’ portfolios at the end of the third quarter of 2016. There were 17 hedge funds in our database with REGI holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Xactly Corp (NYSE:XTLY), Cryolife Inc (NYSE:CRY), and NACCO Industries, Inc. (NYSE:NC) to gather more data points.
Follow Renewable Energy Group Inc. (NASDAQ:REGI)
Follow Renewable Energy Group Inc. (NASDAQ:REGI)
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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Keeping this in mind, let’s analyze the recent 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 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a slump of 12% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in REGI heading into this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Carlson Capital, led by Clint Carlson, holds the largest position in Renewable Energy Group Inc (NASDAQ:REGI). According to regulatory filings, the fund has a $33 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is Phill Gross and Robert Atchinson of Adage Capital Management, with a $5.9 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group. 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-microcap stocks.
Judging by the fact that Renewable Energy Group Inc (NASDAQ:REGI) has faced falling interest from the entirety of the hedge funds we track, logic holds that there were a few fund managers that elected to cut their entire stakes heading into Q4. Intriguingly, Steve Cohen’s Point72 Asset Management sold off the biggest investment of all the investors watched by Insider Monkey, comprising an estimated $8.7 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dropped about $0.5 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to Renewable Energy Group Inc (NASDAQ:REGI). We will take a look at Xactly Corp (NYSE:XTLY), Cryolife Inc (NYSE:CRY), NACCO Industries, Inc. (NYSE:NC), and Castlight Health Inc (NYSE:CSLT). This group of stocks’ market valuations match REGI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XTLY | 13 | 38377 | 1 |
| CRY | 14 | 33992 | -1 |
| NC | 7 | 21384 | -2 |
| CSLT | 14 | 20080 | 0 |
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 $28 million. That figure was $54 million in REGI’s case. Cryolife Inc (NYSE:CRY) is the most popular stock in this table. On the other hand NACCO Industries, Inc. (NYSE:NC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Renewable Energy Group Inc (NASDAQ:REGI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: none.
