Is RSI Stock A Buy or Sell?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Rush Street Interactive, Inc. (NYSE:RSI).

Is RSI stock a buy? Hedge funds were taking an optimistic view. The number of bullish hedge fund positions rose by 26 recently. Rush Street Interactive, Inc. (NYSE:RSI) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. Our calculations also showed that RSI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Today there are a multitude of tools investors can use to value their holdings. Two of the best tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outclass the broader indices by a healthy amount (see the details here).

Michael Platt of BlueCrest Capital Mgmt.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 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. Now we’re going to take a look at the new hedge fund action surrounding Rush Street Interactive, Inc. (NYSE:RSI).

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

At the end of the fourth quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26 from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RSI over the last 22 quarters. So, let’s check out 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, Shelter Haven Capital Management, managed by Jerry Kochanski, holds the largest position in Rush Street Interactive, Inc. (NYSE:RSI). Shelter Haven Capital Management has a $42.6 million position in the stock, comprising 15% of its 13F portfolio. The second most bullish fund manager is Gavin Baker of Atreides Management, with a $21.7 million position; 0.9% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish consist of Dmitry Balyasny’s Balyasny Asset Management, Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors and Michael Platt and William Reeves’s BlueCrest Capital Mgmt.. In terms of the portfolio weights assigned to each position Shelter Haven Capital Management allocated the biggest weight to Rush Street Interactive, Inc. (NYSE:RSI), around 14.98% of its 13F portfolio. Collaborative Holdings Management is also relatively very bullish on the stock, earmarking 7.96 percent of its 13F equity portfolio to RSI.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Shelter Haven Capital Management, managed by Jerry Kochanski, created the most valuable position in Rush Street Interactive, Inc. (NYSE:RSI). Shelter Haven Capital Management had $42.6 million invested in the company at the end of the quarter. Gavin Baker’s Atreides Management also made a $21.7 million investment in the stock during the quarter. The other funds with brand new RSI positions are Dmitry Balyasny’s Balyasny Asset Management, Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..

Let’s now take a look at hedge fund activity in other stocks similar to Rush Street Interactive, Inc. (NYSE:RSI). We will take a look at Open Lending Corporation (NASDAQ:LPRO), Companhia Energética de Minas Gerais (NYSE:CIG), Sunnova Energy International Inc. (NYSE:NOVA), ASGN Incorporated (NYSE:ASGN), Verint Systems Inc. (NASDAQ:VRNT), Workiva Inc (NYSE:WK), and eXp World Holdings, Inc. (NASDAQ:EXPI). This group of stocks’ market valuations resemble RSI’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $389 million. That figure was $225 million in RSI’s case. Open Lending Corporation (NASDAQ:LPRO) is the most popular stock in this table. On the other hand Companhia Energética de Minas Gerais (NYSE:CIG) is the least popular one with only 12 bullish hedge fund positions. Rush Street Interactive, Inc. (NYSE:RSI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RSI is 60.9. 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. 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 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 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately RSI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on RSI were disappointed as the stock returned -37% since the end of December (through 4/19) 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 many of these stocks already outperformed the market since 2019.

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