The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought RingCentral Inc (NYSE:RNG) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
RingCentral Inc (NYSE:RNG) investors should pay attention to an increase in enthusiasm from smart money recently. RingCentral Inc (NYSE:RNG) was in 48 hedge funds’ portfolios at the end of September. The all time high for this statistic is 67. There were 47 hedge funds in our database with RNG holdings at the end of June. Our calculations also showed that RNG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind we’re going to take a look at the key hedge fund action encompassing RingCentral Inc (NYSE:RNG).
Chase Coleman of Tiger Global
Do Hedge Funds Think RNG Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the second quarter of 2021. By comparison, 59 hedge funds held shares or bullish call options in RNG a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Tiger Global Management LLC held the most valuable stake in RingCentral Inc (NYSE:RNG), which was worth $859.8 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $783.6 million worth of shares. SCGE Management, XN Exponent Advisors, and Alkeon Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cota Capital allocated the biggest weight to RingCentral Inc (NYSE:RNG), around 6.45% of its 13F portfolio. XN Exponent Advisors is also relatively very bullish on the stock, designating 5.33 percent of its 13F equity portfolio to RNG.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. XN Exponent Advisors, managed by Gaurav Kapadia, created the most outsized position in RingCentral Inc (NYSE:RNG). XN Exponent Advisors had $111.3 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $78.2 million position during the quarter. The other funds with brand new RNG positions are Renaissance Technologies, Panayotis Takis Sparaggis’s Alkeon Capital Management, and Daniel Patrick Gibson’s Sylebra Capital Management.
Let’s go over hedge fund activity in other stocks similar to RingCentral Inc (NYSE:RNG). These stocks are Darden Restaurants, Inc. (NYSE:DRI), ON Semiconductor Corporation (NASDAQ:ON), Cheniere Energy Partners LP (NYSE:CQP), Ulta Beauty, Inc. (NASDAQ:ULTA), Trip.com Group Limited (NASDAQ:TCOM), Insulet Corporation (NASDAQ:PODD), and AMC Entertainment Holdings Inc (NYSE:AMC). This group of stocks’ market caps match RNG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DRI | 25 | 337086 | -19 |
| ON | 41 | 1251738 | -3 |
| CQP | 3 | 10790 | 1 |
| ULTA | 42 | 935547 | 2 |
| TCOM | 36 | 1794035 | -5 |
| PODD | 32 | 1318310 | -6 |
| AMC | 17 | 252354 | -4 |
| Average | 28 | 842837 | -4.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $843 million. That figure was $2905 million in RNG’s case. Ulta Beauty, Inc. (NASDAQ:ULTA) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks RingCentral Inc (NYSE:RNG) is more popular among hedge funds. Our overall hedge fund sentiment score for RNG is 77.5. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, RNG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RNG were disappointed as the stock returned -18.9% since the end of the third quarter (through 1/31) 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 all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
