Poor Quarter Causes Loss of Confidence in Rand Logistics, Inc. (RLOG)

Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Rand Logistics, Inc. (NASDAQ:RLOG).

Is Rand Logistics, Inc. (NASDAQ:RLOG) the right pick for your portfolio? The smart money is taking a bearish view. The number of long hedge fund bets was trimmed by 1 recently. RLOG was in 4 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with RLOG positions at the end of the previous quarter. It was a difficult quarter for the stock, as it lost over 35% during the period. Likewise, the value of hedgies’ holdings in the stock fell by about 40% during that time as they sold off some of the under-performing shares.

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 Identiv, Inc. (NASDAQ:INVE), Alpha Pro Tech, Ltd. (NYSEMKT:APT), and Qumu Corp (NASDAQ:QUMU) to gather more data points.

To most investors, hedge funds are seen as unimportant, old financial tools of the past. While there are over 8,000 funds in operation at present, our experts hone in on the upper echelon of this group, around 700 funds. Most estimates calculate that this group of people preside over bulk of the smart money’s total capital, and by watching their highest performing equity investments, Insider Monkey has deciphered numerous investment strategies that have historically outstripped Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to go over the new action encompassing Rand Logistics, Inc. (NASDAQ:RLOG).

Hedge fund activity in Rand Logistics, Inc. (NASDAQ:RLOG)

At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 20% declinefrom one quarter earlier. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or had already accumulated large positions).

According to Insider Monkey’s hedge fund database, Peter Schliemann’s Rutabaga Capital Management has the number one position in Rand Logistics, Inc. (NASDAQ:RLOG), worth close to $2.7 million, corresponding to 0.3% of its total 13F portfolio. On Rutabaga Capital Management’s heels is Dorset Management, led by David M. Knott, holding a $2.4 million position; 0.7% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism include Paul Solit’s Potomac Capital Management, and Renaissance Technologies.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Coe Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds into a more promising idea. However, we don’t think this is the case because none of the 700+ hedge funds tracked by Insider Monkey identified RLOG as a viable investment and initiated a position in the stock during that time.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Rand Logistics, Inc. (NASDAQ:RLOG) but similarly valued. We will take a look at Identiv, Inc. (NASDAQ:INVE), Alpha Pro Tech, Ltd. (NYSEMKT:APT), Qumu Corp (NASDAQ:QUMU), and General Employment Enterprises, Inc. (NYSEMKT:JOB). This group of stocks’ market values match RLOG’s market value.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $6 million in RLOG’s case. Identiv, Inc. (NASDAQ:INVE) is the most popular stock in this table. On the other hand Alpha Pro Tech, Ltd. (NYSEMKT:APT) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Rand Logistics, Inc. (NASDAQ:RLOG) is tied at the bottom, though it does have an above-average amount of capital invested in it still, with hedgies owning 15.60% of its float. Nonetheless, we tend to favor stocks with more investors noticing them rather than one wealthy investor doing so, and thus, we fell INVE may be a better option at present, though all of the stocks have relatively underwhelming levels of smart money engagement.