Hedge Funds Interest Keeps Going Up In RadNet Inc. (RDNT)
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of RadNet Inc. (NASDAQ:RDNT).
RadNet Inc. (NASDAQ:RDNT) was in 16 hedge funds' portfolios at the end of March. RDNT has experienced an increase in hedge fund interest recently. There were 14 hedge funds in our database with RDNT positions at the end of the previous quarter. Our calculations also showed that RDNT 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_746830" align="aligncenter" width="400"]
Matthew Hulsizer of PEAK6 Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's go over the key hedge fund action surrounding RadNet Inc. (NASDAQ:RDNT).
How have hedgies been trading RadNet Inc. (NASDAQ:RDNT)?
At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the fourth quarter of 2019. On the other hand, there were a total of 14 hedge funds with a bullish position in RDNT a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in RadNet Inc. (NASDAQ:RDNT) was held by Renaissance Technologies, which reported holding $19.1 million worth of stock at the end of September. It was followed by Cheyne Capital with a $3.1 million position. Other investors bullish on the company included Tamarack Capital Management, Royce & Associates, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Cheyne Capital allocated the biggest weight to RadNet Inc. (NASDAQ:RDNT), around 3.21% of its 13F portfolio. Voce Capital is also relatively very bullish on the stock, setting aside 1.13 percent of its 13F equity portfolio to RDNT.
Consequently, key money managers have jumped into RadNet Inc. (NASDAQ:RDNT) headfirst. Voce Capital, managed by J. Daniel Plants, initiated the most outsized position in RadNet Inc. (NASDAQ:RDNT). Voce Capital had $1.5 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also initiated a $0.4 million position during the quarter. The following funds were also among the new RDNT investors: D. E. Shaw's D E Shaw, Benjamin A. Smith's Laurion Capital Management, and Matthew Hulsizer's PEAK6 Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to RadNet Inc. (NASDAQ:RDNT). These stocks are FinVolution Group (NYSE:FINV), H&E Equipment Services, Inc. (NASDAQ:HEES), HomeStreet Inc (NASDAQ:HMST), and i3 Verticals, Inc. (NASDAQ:IIIV). This group of stocks' market values match RDNT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FINV,4,4687,-2 HEES,16,39998,1 HMST,13,38232,-2 IIIV,11,41532,-1 Average,11,31112,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $33 million in RDNT's case. H&E Equipment Services, Inc. (NASDAQ:HEES) is the most popular stock in this table. On the other hand FinVolution Group (NYSE:FINV) is the least popular one with only 4 bullish hedge fund positions. RadNet Inc. (NASDAQ:RDNT) 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on RDNT as the stock returned 41.7% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
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