Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Renren Inc (NYSE:RENN) has experienced an increase in hedge fund sentiment recently. RENN was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 4 hedge funds in our database with RENN positions at the end of the second quarter. At the end of this article we will also compare RENN to other stocks including SunCoke Energy Partners LP (NYSE:SXCP), Greenhill & Co., Inc. (NYSE:GHL), and New Media Investment Group Inc (NYSE:NEWM) to get a better sense of its popularity.
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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How are hedge funds trading Renren Inc (NYSE:RENN)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a 50% jump from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RENN over the last 5 quarters, which had fallen sharply ahead of the latest quarter’s rebound. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Larry Chen and Terry Zhang’s Tairen Capital has the most valuable position in Renren Inc (NYSE:RENN), worth close to $1 million. The second most bullish fund manager is Paul Marshall and Ian Wace of Marshall Wace LLP, with a $0.6 million position. Other peers that are bullish encompass Renaissance Technologies, one of the largest hedge funds in the world, Ken Griffin’s Citadel Investment Group, and Michael Platt and William Reeves’ BlueCrest Capital Mgmt. 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-micro-cap stocks.
Consequently, specific money managers were breaking ground themselves. Jim Simons’ Renaissance Technologies initiated the largest position in Renren Inc (NYSE:RENN). Renaissance Technologies had $0.3 million invested in the company at the end of the quarter. BlueCrest Capital Mgmt. also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new RENN position was Citadel Investment Group.
Let’s also examine hedge fund activity in other stocks similar to Renren Inc (NYSE:RENN). We will take a look at SunCoke Energy Partners LP (NYSE:SXCP), Greenhill & Co., Inc. (NYSE:GHL), New Media Investment Group Inc (NYSE:NEWM), and Quality Systems, Inc. (NASDAQ:QSII). This group of stocks’ market caps match RENN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SXCP | 3 | 4445 | -2 |
| GHL | 16 | 106468 | 6 |
| NEWM | 17 | 68487 | 2 |
| QSII | 14 | 31504 | 1 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was just $3 million in RENN’s case. New Media Investment Group Inc (NYSE:NEWM) is the most popular stock in this table. On the other hand SunCoke Energy Partners LP (NYSE:SXCP) is the least popular one with only 3 bullish hedge fund positions. Renren Inc (NYSE:RENN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NEWM might be a better candidate to consider taking a long position in.
Disclosure: None
