Were Hedge Funds Right About Rimini Street, Inc. (RMNI)?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will 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 nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Rimini Street, Inc. (NASDAQ:RMNI).

Is Rimini Street, Inc. (NASDAQ:RMNI) a worthy investment right now? The smart money was buying. The number of long hedge fund positions went up by 5 lately. Rimini Street, Inc. (NASDAQ:RMNI) was in 16 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 11. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that RMNI 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.

J. Carlo Cannell of Cannell Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind we’re going to take a look at the fresh hedge fund action regarding Rimini Street, Inc. (NASDAQ:RMNI).

Do Hedge Funds Think RMNI Is A Good Stock To Buy Now?

At first quarter’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 45% from the fourth quarter of 2020. On the other hand, there were a total of 7 hedge funds with a bullish position in RMNI a year ago. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Among these funds, Adams Street Partners held the most valuable stake in Rimini Street, Inc. (NASDAQ:RMNI), which was worth $200.8 million at the end of the fourth quarter. On the second spot was Voss Capital which amassed $29.6 million worth of shares. Cannell Capital, AIGH Investment Partners, and G2 Investment Partners 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 Adams Street Partners allocated the biggest weight to Rimini Street, Inc. (NASDAQ:RMNI), around 32.18% of its 13F portfolio. Voss Capital is also relatively very bullish on the stock, dishing out 12.34 percent of its 13F equity portfolio to RMNI.

As one would reasonably expect, some big names have been driving this bullishness. AIGH Investment Partners, managed by Orin Hirschman, established the biggest position in Rimini Street, Inc. (NASDAQ:RMNI). AIGH Investment Partners had $10.6 million invested in the company at the end of the quarter. Josh Goldberg’s G2 Investment Partners Management also made a $8.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Ravee Mehta’s Nishkama Capital, George McCabe’s Portolan Capital Management, and Ben Jacobs’s Anomaly Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Rimini Street, Inc. (NASDAQ:RMNI) but similarly valued. These stocks are CIRCOR International, Inc. (NYSE:CIR), Ellington Financial Inc. (NYSE:EFC), ChannelAdvisor Corp (NYSE:ECOM), Shift Technologies, Inc. (NASDAQ:SFT), ViewRay, Inc. (NASDAQ:VRAY), Gossamer Bio, Inc. (NASDAQ:GOSS), and Ethan Allen Interiors Inc. (NYSE:ETH). This group of stocks’ market values match RMNI’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $302 million in RMNI’s case. Gossamer Bio, Inc. (NASDAQ:GOSS) is the most popular stock in this table. On the other hand Ellington Financial Inc. (NYSE:EFC) is the least popular one with only 6 bullish hedge fund positions. Rimini Street, Inc. (NASDAQ:RMNI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RMNI is 78.5. 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. This is a slightly positive signal but 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately RMNI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RMNI were disappointed as the stock returned -6.2% since the end of March (through 7/23) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.