In this article we will take a look at whether hedge funds think Radcom Ltd. (NASDAQ:RDCM) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Radcom Ltd. (NASDAQ:RDCM) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that RDCM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 ACRES Commercial Realty Corp. (NYSE:ACR), Grindrod Shipping Holdings Ltd. (NASDAQ:GRIN), and Northern Technologies International Corp (NASDAQ:NTIC) to gather more data points.
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Do Hedge Funds Think RDCM Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in RDCM a year ago. So, let’s review 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, G2 Investment Partners Management, managed by Josh Goldberg, holds the largest position in Radcom Ltd. (NASDAQ:RDCM). G2 Investment Partners Management has a $4.6 million position in the stock, comprising 0.7% of its 13F portfolio. On G2 Investment Partners Management’s heels is Lynrock Lake, led by Cynthia Paul, holding a $3 million position; 0.2% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position G2 Investment Partners Management allocated the biggest weight to Radcom Ltd. (NASDAQ:RDCM), around 0.74% of its 13F portfolio. Lynrock Lake is also relatively very bullish on the stock, earmarking 0.2 percent of its 13F equity portfolio to RDCM.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Rima Senvest 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 in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Lynrock Lake).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Radcom Ltd. (NASDAQ:RDCM) but similarly valued. These stocks are ACRES Commercial Realty Corp. (NYSE:ACR), Grindrod Shipping Holdings Ltd. (NASDAQ:GRIN), Northern Technologies International Corp (NASDAQ:NTIC), Powerbridge Technologies Co., Ltd. (NASDAQ:PBTS), FIRST FINANCIAL NORTHWEST, INC. (NASDAQ:FFNW), Aytu BioScience, Inc. (NASDAQ:AYTU), and BioSig Technologies, Inc. (NASDAQ:BSGM). This group of stocks’ market valuations are similar to RDCM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ACR | 5 | 16149 | -4 |
| GRIN | 2 | 8427 | 1 |
| NTIC | 3 | 8102 | -2 |
| PBTS | 2 | 109 | 1 |
| FFNW | 4 | 10608 | 0 |
| AYTU | 7 | 14594 | 3 |
| BSGM | 3 | 273 | 2 |
| Average | 3.7 | 8323 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.7 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $10 million in RDCM’s case. Aytu BioScience, Inc. (NASDAQ:AYTU) is the most popular stock in this table. On the other hand Grindrod Shipping Holdings Ltd. (NASDAQ:GRIN) is the least popular one with only 2 bullish hedge fund positions. Radcom Ltd. (NASDAQ:RDCM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RDCM is 33. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 surpassed the market again by 3.3 percentage points. Unfortunately RDCM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); RDCM investors were disappointed as the stock returned 1.4% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
