Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of RealNetworks Inc (NASDAQ:RNWK) based on that data.
RealNetworks Inc (NASDAQ:RNWK) was in 5 hedge funds' portfolios at the end of the first quarter of 2020. RNWK investors should be aware of a decrease in hedge fund interest in recent months. There were 6 hedge funds in our database with RNWK holdings at the end of the previous quarter. Our calculations also showed that RNWK 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_747612" align="aligncenter" width="399"] Eric Singer of VIEX Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a look at the new hedge fund action surrounding RealNetworks Inc (NASDAQ:RNWK).
What does smart money think about RealNetworks Inc (NASDAQ:RNWK)?
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RNWK over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John W. Rogers's Ariel Investments has the biggest position in RealNetworks Inc (NASDAQ:RNWK), worth close to $4.4 million, comprising 0.1% of its total 13F portfolio. On Ariel Investments's heels is Eric Singer of VIEX Capital Advisors, with a $1.5 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions include Renaissance Technologies, Chuck Royce's Royce & Associates and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position VIEX Capital Advisors allocated the biggest weight to RealNetworks Inc (NASDAQ:RNWK), around 1.77% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, designating 0.08 percent of its 13F equity portfolio to RNWK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Ancora Advisors. 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 none of the 750+ hedge funds tracked by Insider Monkey identified RNWK as a viable investment and initiated a position in the stock.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as RealNetworks Inc (NASDAQ:RNWK) but similarly valued. These stocks are USA Truck, Inc. (NASDAQ:USAK), Finjan Holdings, Inc. (NASDAQ:FNJN), FSB Bancorp, Inc. (NASDAQ:FSBC), and Emmis Communications Corporation (NASDAQ:EMMS). All of these stocks' market caps are closest to RNWK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USAK,2,366,-1 FNJN,1,1917,-2 FSBC,5,6165,0 EMMS,3,2304,1 Average,2.75,2688,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $7 million in RNWK's case. FSB Bancorp, Inc. (NASDAQ:FSBC) is the most popular stock in this table. On the other hand Finjan Holdings, Inc. (NASDAQ:FNJN) is the least popular one with only 1 bullish hedge fund positions. RealNetworks Inc (NASDAQ:RNWK) is not the most popular stock in this group but hedge fund interest is still above 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on RNWK as the stock returned 153.4% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.