Is Ruby Tuesday, Inc. (RT) a Good Buy?

Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Ruby Tuesday, Inc. (NYSE:RT) and see how the stock is affected by the recent hedge fund activity.

Is Ruby Tuesday, Inc. (NYSE:RT) a buy, sell, or hold? Investors who are in the know are turning bullish. The number of long hedge fund positions advanced by 1 lately. At the end of this article we will also compare RT to other stocks including Peabody Energy Corporation (NYSE:BTU), Oriental Financial Group Inc. (NYSE:OFG), and CEVA, Inc. (NASDAQ:CEVA) to get a better sense of its popularity.

In today’s marketplace there are many tools stock traders use to size up stocks. A couple of the less utilized tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top money managers can beat the broader indices by a significant margin (see the details here).

Now, let’s review the latest action regarding Ruby Tuesday, Inc. (NYSE:RT).

What have hedge funds been doing with Ruby Tuesday, Inc. (NYSE:RT)?

At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the second quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Ruby Tuesday, Inc. (NYSE:RT). Royce & Associates has a $12.6 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates’s heels is Greenwood Investments, managed by Steve Tannenbaum, which holds a $9.3 million position; 9.6% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish consist of Jim Simons’s Renaissance Technologies, Richard Driehaus’ Driehaus Capital and Israel Englander’s Millennium Management.

Now, some big names have jumped into Ruby Tuesday, Inc. (NYSE:RT) headfirst. AQR Capital Management, managed by Cliff Asness, assembled the biggest position in Ruby Tuesday, Inc. (NYSE:RT). AQR Capital Management had $0.6 million invested in the company at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is Dmitry Balyasny’s Balyasny Asset Management.

Let’s now take a look at hedge fund activity in other stocks similar to Ruby Tuesday, Inc. (NYSE:RT). We will take a look at Peabody Energy Corporation (NYSE:BTU), Oriental Financial Group Inc. (NYSE:OFG), CEVA, Inc. (NASDAQ:CEVA), and Sanchez Energy Corp (NYSE:SN). This group of stocks’ market caps match RT’s market cap.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $47 million in RT’s case. Peabody Energy Corporation (NYSE:BTU) is the most popular stock in this table. On the other hand CEVA, Inc. (NASDAQ:CEVA) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Ruby Tuesday, Inc. (NYSE:RT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.