Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Richardson Electronics, Ltd. (NASDAQ:RELL).
Richardson Electronics, Ltd. (NASDAQ:RELL) has seen an increase in support from the world’s most elite money managers lately. Richardson Electronics, Ltd. (NASDAQ:RELL) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 6. Our calculations also showed that RELL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a look at the key hedge fund action encompassing Richardson Electronics, Ltd. (NASDAQ:RELL).
Do Hedge Funds Think RELL Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RELL over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the number one position in Richardson Electronics, Ltd. (NASDAQ:RELL). Royce & Associates has a $6.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, holding a $5.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that hold long positions comprise Frederick DiSanto’s Ancora Advisors, and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Richardson Electronics, Ltd. (NASDAQ:RELL), around 0.04% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to RELL.
Now, some big names have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, created the biggest call position in Richardson Electronics, Ltd. (NASDAQ:RELL). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.1 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Richardson Electronics, Ltd. (NASDAQ:RELL). These stocks are Lifeway Foods, Inc. (NASDAQ:LWAY), Merrimack Pharmaceuticals Inc (NASDAQ:MACK), Universe Pharmaceuticals INC (NASDAQ:UPC), Urban One, Inc. (NASDAQ:UONEK), Dolphin Entertainment, Inc. (NASDAQ:DLPN), Beasley Broadcast Group Inc (NASDAQ:BBGI), and Streamline Health Solutions Inc. (NASDAQ:STRM). All of these stocks’ market caps match RELL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LWAY | 4 | 3065 | 0 |
| MACK | 7 | 19361 | 0 |
| UPC | 1 | 128 | 1 |
| UONEK | 4 | 1893 | 1 |
| DLPN | 1 | 150 | 0 |
| BBGI | 2 | 3398 | -1 |
| STRM | 5 | 23686 | -2 |
| Average | 3.4 | 7383 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.4 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $13 million in RELL’s case. Merrimack Pharmaceuticals Inc (NASDAQ:MACK) is the most popular stock in this table. On the other hand Universe Pharmaceuticals INC (NASDAQ:UPC) is the least popular one with only 1 bullish hedge fund positions. Richardson Electronics, Ltd. (NASDAQ:RELL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RELL is 51. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on RELL as the stock returned 39.5% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
