We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like RiceBran Technologies (NASDAQ:RIBT).
Hedge fund interest in RiceBran Technologies (NASDAQ:RIBT) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Arbutus Biopharma Corp (NASDAQ:ABUS), Security National Financial Corp. (NASDAQ:SNFCA), and Permianville Royalty Trust (NYSE:PVL) to gather more data points. Our calculations also showed that RIBT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most traders, hedge funds are viewed as worthless, outdated financial tools of the past. While there are greater than 8000 funds in operation at present, Our researchers hone in on the upper echelon of this group, about 750 funds. It is estimated that this group of investors orchestrate the majority of the smart money’s total capital, and by keeping an eye on their best equity investments, Insider Monkey has formulated a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to analyze the new hedge fund action encompassing RiceBran Technologies (NASDAQ:RIBT).
How have hedgies been trading RiceBran Technologies (NASDAQ:RIBT)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RIBT over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the most valuable position in RiceBran Technologies (NASDAQ:RIBT), worth close to $1.3 million, accounting for less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Royce & Associates, led by Chuck Royce, holding a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Murray Stahl’s Horizon Asset Management, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Horizon Asset Management allocated the biggest weight to RiceBran Technologies (NASDAQ:RIBT), around 0.0016% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.0011 percent of its 13F equity portfolio to RIBT.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as RiceBran Technologies (NASDAQ:RIBT) but similarly valued. These stocks are Arbutus Biopharma Corp (NASDAQ:ABUS), Security National Financial Corp. (NASDAQ:SNFCA), Permianville Royalty Trust (NYSE:PVL), and Beasley Broadcast Group Inc (NASDAQ:BBGI). This group of stocks’ market values match RIBT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABUS | 7 | 2516 | 0 |
| SNFCA | 1 | 812 | 0 |
| PVL | 2 | 436 | 1 |
| BBGI | 4 | 5076 | 0 |
| Average | 3.5 | 2210 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.5 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $2 million in RIBT’s case. Arbutus Biopharma Corp (NASDAQ:ABUS) is the most popular stock in this table. On the other hand Security National Financial Corp. (NASDAQ:SNFCA) is the least popular one with only 1 bullish hedge fund positions. RiceBran Technologies (NASDAQ:RIBT) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately RIBT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RIBT were disappointed as the stock returned -5.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
