The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Retail Opportunity Investments Corp (NASDAQ:ROIC) based on those filings.
Is Retail Opportunity Investments Corp (NASDAQ:ROIC) the right pick for your portfolio? Hedge funds are selling. The number of long hedge fund bets dropped by 3 lately. Our calculations also showed that ROIC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). ROIC was in 18 hedge funds’ portfolios at the end of March. There were 21 hedge funds in our database with ROIC holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Martin Whitman of Third Avenue Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the new hedge fund action encompassing Retail Opportunity Investments Corp (NASDAQ:ROIC).
How have hedgies been trading Retail Opportunity Investments Corp (NASDAQ:ROIC)?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in ROIC over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Retail Opportunity Investments Corp (NASDAQ:ROIC), which was worth $14 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $7.4 million worth of shares. Balyasny Asset Management, Winton Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tudor Investment Corp allocated the biggest weight to Retail Opportunity Investments Corp (NASDAQ:ROIC), around 0.12% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.11 percent of its 13F equity portfolio to ROIC.
Judging by the fact that Retail Opportunity Investments Corp (NASDAQ:ROIC) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of funds who sold off their entire stakes by the end of the first quarter. It’s worth mentioning that Matthew Tewksbury’s Stevens Capital Management dropped the biggest position of all the hedgies watched by Insider Monkey, worth close to $0.9 million in stock. Mika Toikka’s fund, AlphaCrest Capital Management, also said goodbye to its stock, about $0.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Retail Opportunity Investments Corp (NASDAQ:ROIC) but similarly valued. These stocks are Fluor Corporation (NYSE:FLR), Norbord Inc. (NYSE:OSB), Black Stone Minerals LP (NYSE:BSM), and Callaway Golf Company (NYSE:ELY). All of these stocks’ market caps resemble ROIC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FLR | 24 | 94067 | 0 |
| OSB | 12 | 19441 | -4 |
| BSM | 3 | 2190 | -1 |
| ELY | 23 | 120223 | 3 |
| Average | 15.5 | 58980 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $44 million in ROIC’s case. Fluor Corporation (NYSE:FLR) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 3 bullish hedge fund positions. Retail Opportunity Investments Corp (NASDAQ:ROIC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on ROIC as the stock returned 36.1% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
