Before we spend many hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of RealPage, Inc. (NASDAQ:RP).
RealPage, Inc. (NASDAQ:RP) was in 27 hedge funds' portfolios at the end of the third quarter of 2018. RP investors should be aware of a decrease in activity from the world's largest hedge funds recently. There were 28 hedge funds in our database with RP holdings at the end of the previous quarter. Our calculations also showed that RP isn't among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
Let's check out the fresh hedge fund action encompassing RealPage, Inc. (NASDAQ:RP).
Hedge fund activity in RealPage, Inc. (NASDAQ:RP)
Heading into the fourth quarter of 2018, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in RP heading into this year. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Sharlyn C. Heslam's Stockbridge Partners has the biggest position in RealPage, Inc. (NASDAQ:RP), worth close to $178.2 million, comprising 7.1% of its total 13F portfolio. The second most bullish fund manager is Garelick Capital Partners, led by Bruce Garelick, holding a $68.7 million position; 11.3% of its 13F portfolio is allocated to the company. Some other peers that are bullish comprise Israel Englander's Millennium Management, Panayotis Takis Sparaggis's Alkeon Capital Management and Greg Poole's Echo Street Capital Management.
Because RealPage, Inc. (NASDAQ:RP) has experienced declining sentiment from hedge fund managers, it's safe to say that there were a few fund managers who sold off their positions entirely in the third quarter. At the top of the heap, Stuart J. Zimmer's Zimmer Partners cut the biggest investment of the 700 funds tracked by Insider Monkey, totaling an estimated $4.7 million in stock, and Bart Baum's Ionic Capital Management was right behind this move, as the fund dumped about $3.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds in the third quarter.
Let's check out hedge fund activity in other stocks similar to RealPage, Inc. (NASDAQ:RP). We will take a look at Reliance Steel & Aluminum Co. (NYSE:RS), Etsy Inc (NASDAQ:ETSY), Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR), and Knight-Swift Transportation Holdings Inc. (NYSE:KNX). This group of stocks' market values match RP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RS,27,374418,3 ETSY,32,924716,2 ASR,3,17929,-1 KNX,31,411617,-6 Average,23.25,432170,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $432 million. That figure was $424 million in RP's case. Etsy Inc (NASDAQ:ETSY) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) is the least popular one with only 3 bullish hedge fund positions. RealPage, Inc. (NASDAQ:RP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard ETSY might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.