The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Rapid7 Inc (NASDAQ:RPD).
Is RPD a good stock to buy now? The best stock pickers were turning bullish. The number of long hedge fund positions rose by 7 in recent months. Rapid7 Inc (NASDAQ:RPD) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 28. Our calculations also showed that RPD 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are perceived as worthless, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, Our experts look at the top tier of this club, around 850 funds. These hedge fund managers control the lion’s share of the smart money’s total asset base, and by following their top picks, Insider Monkey has deciphered several investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Phillip Gross of Adage 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 let’s take a glance at the latest hedge fund action surrounding Rapid7 Inc (NASDAQ:RPD).
Do Hedge Funds Think RPD Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RPD over the last 21 quarters. 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 Rapid7 Inc (NASDAQ:RPD) was held by Millennium Management, which reported holding $26.6 million worth of stock at the end of September. It was followed by PEAK6 Capital Management with a $16.8 million position. Other investors bullish on the company included Two Sigma Advisors, Adage Capital Management, and Aequim Alternative Investments. In terms of the portfolio weights assigned to each position Diker Management allocated the biggest weight to Rapid7 Inc (NASDAQ:RPD), around 2.29% of its 13F portfolio. Breakline Capital is also relatively very bullish on the stock, earmarking 1.47 percent of its 13F equity portfolio to RPD.
As industrywide interest jumped, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the biggest position in Rapid7 Inc (NASDAQ:RPD). Millennium Management had $26.6 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $9.2 million position during the quarter. The other funds with brand new RPD positions are Anand Parekh’s Alyeska Investment Group, Michael Gelband’s ExodusPoint Capital, and Jinghua Yan’s TwinBeech Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Rapid7 Inc (NASDAQ:RPD) but similarly valued. These stocks are Synovus Financial Corp. (NYSE:SNV), Clean Harbors Inc (NYSE:CLH), MasTec, Inc. (NYSE:MTZ), Overstock.com, Inc. (NASDAQ:OSTK), Covetrus, Inc. (NASDAQ:CVET), Compañía de Minas Buenaventura S.A.A. (NYSE:BVN), and SVMK Inc. (NASDAQ:SVMK). All of these stocks’ market caps are closest to RPD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNV | 25 | 122387 | -2 |
| CLH | 24 | 250466 | 5 |
| MTZ | 35 | 155595 | 6 |
| OSTK | 22 | 367622 | 7 |
| CVET | 24 | 246808 | 0 |
| BVN | 8 | 91124 | 1 |
| SVMK | 33 | 247140 | 0 |
| Average | 24.4 | 211592 | 2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $81 million in RPD’s case. MasTec, Inc. (NYSE:MTZ) is the most popular stock in this table. On the other hand Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) is the least popular one with only 8 bullish hedge fund positions. Rapid7 Inc (NASDAQ:RPD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RPD is 56.6. 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 December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on RPD as the stock returned 19.6% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
