Is Ruckus Wireless Inc (RKUS) Going to Burn These Hedge Funds?

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Ruckus Wireless Inc (NYSE:RKUS).

Ruckus Wireless Inc (NYSE:RKUS) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of September. 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 Shenandoah Telecommunications Company (NASDAQ:SHEN), Celldex Therapeutics, Inc. (NASDAQ:CLDX), and Diodes Incorporated (NASDAQ:DIOD) to gather more data points.

At the moment there are a large number of tools market participants employ to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the market by a very impressive margin (see the details here).

Now, let’s take a look at the key action regarding Ruckus Wireless Inc (NYSE:RKUS).

What have hedge funds been doing with Ruckus Wireless Inc (NYSE:RKUS)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged on the quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Anand Parekh’s Alyeska Investment Group has the number one position in Ruckus Wireless Inc (NYSE:RKUS), worth close to $30.3 million, amounting to 0.4% of its total 13F portfolio. The second most bullish fund is John Brennan of Sirios Capital Management, with a $20.7 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Brian Ashford-Russell and Tim Woolley’s Polar Capital, Ken Hahn’s Quentec Asset Management and Jim Simons’ Renaissance Technologies.

Because Ruckus Wireless Inc (NYSE:RKUS) has faced falling interest from the smart money, it’s easy to see that there is a sect of hedge funds that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Bruce Kovner’s Caxton Associates LP dumped the biggest stake of all the hedgies tracked by Insider Monkey, worth an estimated $6.2 million in call options.. Dmitry Balyasny’s fund, Balyasny Asset Management, also said goodbye to its call options., about $3.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ruckus Wireless Inc (NYSE:RKUS) but similarly valued. We will take a look at Shenandoah Telecommunications Company (NASDAQ:SHEN), Celldex Therapeutics, Inc. (NASDAQ:CLDX), Diodes Incorporated (NASDAQ:DIOD), and TherapeuticsMD Inc (OTC:TXMD). This group of stocks’ market values match RKUS’s market value.

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 $57 million, compared to $128 million in RKUS’s case. Shenandoah Telecommunications Company (NASDAQ:SHEN) is the most popular stock in this table with 16 funds disclosing long positions, while Diodes Incorporated (NASDAQ:DIOD) is the least popular one. Compared to these stocks Ruckus Wireless Inc (NYSE:RKUS) 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 add it to your portfolio.