In this article we will take a look at whether hedge funds think Regis Corporation (NYSE:RGS) 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.
Regis Corporation (NYSE:RGS) was in 9 hedge funds' portfolios at the end of March. RGS shareholders have witnessed a decrease in activity from the world's largest hedge funds in recent months. There were 11 hedge funds in our database with RGS holdings at the end of the previous quarter. Our calculations also showed that RGS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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What have hedge funds been doing with Regis Corporation (NYSE:RGS)?
At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the fourth quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in RGS a year ago. With the smart money's capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Birch Run Capital held the most valuable stake in Regis Corporation (NYSE:RGS), which was worth $63 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $11.4 million worth of shares. Royce & Associates, First Pacific Advisors LLC, and D E Shaw 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 Birch Run Capital allocated the biggest weight to Regis Corporation (NYSE:RGS), around 56.36% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to RGS.
Judging by the fact that Regis Corporation (NYSE:RGS) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of fund managers that decided to sell off their full holdings by the end of the first quarter. It's worth mentioning that Donald Sussman's Paloma Partners dumped the biggest investment of the "upper crust" of funds tracked by Insider Monkey, comprising an estimated $0.7 million in stock. Paul Tudor Jones's fund, Tudor Investment Corp, also dumped its stock, about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks similar to Regis Corporation (NYSE:RGS). We will take a look at Gain Capital Holdings Inc (NYSE:GCAP), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), Red Violet, Inc. (NASDAQ:RDVT), and Stereotaxis Inc (NASDAQ:STXS). This group of stocks' market valuations are similar to RGS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GCAP,14,14540,4 LXRX,11,12887,0 RDVT,5,9917,-4 STXS,13,84564,2 Average,10.75,30477,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $80 million in RGS's case. Gain Capital Holdings Inc (NYSE:GCAP) is the most popular stock in this table. On the other hand Red Violet, Inc. (NASDAQ:RDVT) is the least popular one with only 5 bullish hedge fund positions. Regis Corporation (NYSE:RGS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on RGS as the stock returned 41.6% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.