We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Ritchie Bros. Auctioneers (NYSE:RBA) based on that data.
Is Ritchie Bros. Auctioneers (NYSE:RBA) a sound investment right now? Investors who are in the know were getting less optimistic. The number of long hedge fund bets dropped by 4 in recent months. Ritchie Bros. Auctioneers (NYSE:RBA) was in 19 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that RBA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 23 hedge funds in our database with RBA holdings at the end of December.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Christian Leone of Luxor Capital Group
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Do Hedge Funds Think RBA Is A Good Stock To Buy Now?
At the end of March, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RBA over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Luxor Capital Group was the largest shareholder of Ritchie Bros. Auctioneers (NYSE:RBA), with a stake worth $158.8 million reported as of the end of March. Trailing Luxor Capital Group was Renaissance Technologies, which amassed a stake valued at $87.4 million. Alyeska Investment Group, Royce & Associates, and Luxor Capital Group 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 Luxor Capital Group allocated the biggest weight to Ritchie Bros. Auctioneers (NYSE:RBA), around 1.95% of its 13F portfolio. DSAM Partners is also relatively very bullish on the stock, setting aside 0.54 percent of its 13F equity portfolio to RBA.
Due to the fact that Ritchie Bros. Auctioneers (NYSE:RBA) has witnessed declining sentiment from the smart money, it's easy to see that there were a few funds that slashed their entire stakes heading into Q2. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the biggest stake of the "upper crust" of funds followed by Insider Monkey, worth close to $11.3 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also dumped its stock, about $3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds heading into Q2.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Ritchie Bros. Auctioneers (NYSE:RBA) but similarly valued. These stocks are Pacific Biosciences of California (NASDAQ:PACB), FirstService Corporation (TSE:FSV), Huntsman Corporation (NYSE:HUN), eXp World Holdings, Inc. (NASDAQ:EXPI), Apartment Income REIT Corp. (NYSE:AIRC), Sonoco Products Company (NYSE:SON), and MDU Resources Group Inc (NYSE:MDU). This group of stocks' market caps are closest to RBA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PACB,24,1492893,1 FSV,17,238970,1 HUN,35,735950,6 EXPI,15,171695,-5 AIRC,14,210803,-3 SON,25,157746,5 MDU,21,162814,1 Average,21.6,452982,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $453 million. That figure was $345 million in RBA's case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table. On the other hand Apartment Income REIT Corp. (NYSE:AIRC) is the least popular one with only 14 bullish hedge fund positions. Ritchie Bros. Auctioneers (NYSE:RBA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RBA is 36.7. 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately RBA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); RBA investors were disappointed as the stock returned 2.7% since the end of March (through 7/16) 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.