Is REV Stock A Buy or Sell?

In this article we will analyze whether Revlon Inc (NYSE:REV) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is REV stock a buy or sell? Revlon Inc (NYSE:REV) was in 33 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 38. REV has seen an increase in hedge fund interest recently. There were 32 hedge funds in our database with REV positions at the end of the third quarter. Our calculations also showed that REV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

Richard S. Pzena of Pzena Investment Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to view the recent hedge fund action regarding Revlon Inc (NYSE:REV).

Do Hedge Funds Think REV Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. By comparison, 38 hedge funds held shares or bullish call options in REV a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Revlon Inc (NYSE:REV) was held by SCW Capital Management, which reported holding $40.9 million worth of stock at the end of December. It was followed by Pzena Investment Management with a $39.9 million position. Other investors bullish on the company included Praesidium Investment Management Company, SQN Investors, and Sectoral Asset Management. In terms of the portfolio weights assigned to each position SCW Capital Management allocated the biggest weight to Revlon Inc (NYSE:REV), around 20.11% of its 13F portfolio. Litespeed Management is also relatively very bullish on the stock, dishing out 15.52 percent of its 13F equity portfolio to REV.

As one would reasonably expect, some big names were leading the bulls’ herd. Praesidium Investment Management Company, managed by Kevin Oram and Peter Uddo, assembled the largest position in Revlon Inc (NYSE:REV). Praesidium Investment Management Company had $39.6 million invested in the company at the end of the quarter. Amish Mehta’s SQN Investors also initiated a $29.7 million position during the quarter. The following funds were also among the new REV investors: Israel Englander’s Millennium Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Renaissance Technologies.

Let’s go over hedge fund activity in other stocks similar to Revlon Inc (NYSE:REV). These stocks are The Lovesac Company (NASDAQ:LOVE), Aerie Pharmaceuticals Inc (NASDAQ:AERI), Helix Energy Solutions Group Inc. (NYSE:HLX), Gladstone Commercial Corporation (NASDAQ:GOOD), Global Medical REIT Inc. (NYSE:GMRE), Ducommun Incorporated (NYSE:DCO), and United Fire Group, Inc. (NASDAQ:UFCS). All of these stocks’ market caps are closest to REV’s market cap.

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As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $309 million in REV’s case. Aerie Pharmaceuticals Inc (NASDAQ:AERI) is the most popular stock in this table. On the other hand United Fire Group, Inc. (NASDAQ:UFCS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Revlon Inc (NYSE:REV) is more popular among hedge funds. Our overall hedge fund sentiment score for REV is 82.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Unfortunately REV wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on REV were disappointed as the stock returned 2.9% since the end of the fourth quarter (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.