Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to RigNet Inc (NASDAQ:RNET) changed recently.
Is RigNet (RNET) a good stock to buy now? Hedge fund interest in RigNet Inc (NASDAQ:RNET) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that RNET isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare RNET to other stocks including Marlin Business Services Corp. (NASDAQ:MRLN), X Financial (NYSE:XYF), and RYB Education, Inc. (NYSE:RYB) to get a better sense of its popularity.
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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Now we’re going to view the recent hedge fund action encompassing RigNet Inc (NASDAQ:RNET).
How are hedge funds trading RigNet Inc (NASDAQ:RNET)?
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in RNET a year ago. So, let’s see 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, holds the biggest position in RigNet Inc (NASDAQ:RNET). Renaissance Technologies has a $3.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Austin Wiggins Hopper of AWH Capital, with a $2.2 million position; 3% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism encompass Josh Goldberg’s G2 Investment Partners Management, Ali Motamed’s Invenomic Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position AWH Capital allocated the biggest weight to RigNet Inc (NASDAQ:RNET), around 3.04% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, earmarking 0.26 percent of its 13F equity portfolio to RNET.
Since RigNet Inc (NASDAQ:RNET) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few fund managers that elected to cut their positions entirely last quarter. It’s worth mentioning that Donald Sussman’s Paloma Partners dumped the biggest investment of the 750 funds watched by Insider Monkey, worth an estimated $0.2 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also sold off its stock, about $0 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to RigNet Inc (NASDAQ:RNET). These stocks are Marlin Business Services Corp. (NASDAQ:MRLN), X Financial (NYSE:XYF), RYB Education, Inc. (NYSE:RYB), Braemar Hotels & Resorts Inc. (NYSE:BHR), Zagg Inc (NASDAQ:ZAGG), Orion Group Holdings, Inc. (NYSE:ORN), and Severn Bancorp Inc (NASDAQ:SVBI). This group of stocks’ market caps are similar to RNET’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRLN | 5 | 31525 | 1 |
| XYF | 3 | 318 | 1 |
| RYB | 3 | 5548 | 0 |
| BHR | 14 | 18067 | -3 |
| ZAGG | 10 | 12317 | -2 |
| ORN | 10 | 4922 | 3 |
| SVBI | 4 | 14532 | 0 |
| Average | 7 | 12461 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $7 million in RNET’s case. Braemar Hotels & Resorts Inc. (NYSE:BHR) is the most popular stock in this table. On the other hand X Financial (NYSE:XYF) is the least popular one with only 3 bullish hedge fund positions. RigNet Inc (NASDAQ:RNET) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RNET is 35. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on RNET as the stock returned 30.2% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
