At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Repay Holdings Corporation (NASDAQ:RPAY).
Is Repay Holdings Corporation (NASDAQ:RPAY) the right pick for your portfolio? Money managers are taking a bearish view. The number of bullish hedge fund bets were cut by 4 lately. Our calculations also showed that RPAY 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). RPAY was in 8 hedge funds' portfolios at the end of March. There were 12 hedge funds in our database with RPAY holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are assumed to be underperforming, outdated financial tools of yesteryear. While there are more than 8000 funds trading today, Our experts hone in on the top tier of this club, around 850 funds. It is estimated that this group of investors direct the majority of the smart money's total asset base, and by monitoring their unrivaled picks, Insider Monkey has determined many investment strategies that have historically outrun the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_221556" align="aligncenter" width="400"] Richard Driehaus of Driehaus Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. Keeping this in mind we're going to take a glance at the key hedge fund action surrounding Repay Holdings Corporation (NASDAQ:RPAY).
What have hedge funds been doing with Repay Holdings Corporation (NASDAQ:RPAY)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RPAY over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Sylebra Capital Management was the largest shareholder of Repay Holdings Corporation (NASDAQ:RPAY), with a stake worth $54.4 million reported as of the end of September. Trailing Sylebra Capital Management was Engle Capital, which amassed a stake valued at $17.8 million. Driehaus Capital, Parian Global Management, and Millennium Management 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 Engle Capital allocated the biggest weight to Repay Holdings Corporation (NASDAQ:RPAY), around 5.9% of its 13F portfolio. Parian Global Management is also relatively very bullish on the stock, setting aside 5.32 percent of its 13F equity portfolio to RPAY.
Since Repay Holdings Corporation (NASDAQ:RPAY) has experienced declining sentiment from the smart money, it's safe to say that there lies a certain "tier" of funds that elected to cut their full holdings heading into Q4. It's worth mentioning that Usman Waheed's Strycker View Capital cut the largest stake of the 750 funds monitored by Insider Monkey, totaling an estimated $12.1 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund cut about $8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 4 funds heading into Q4.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Repay Holdings Corporation (NASDAQ:RPAY) but similarly valued. These stocks are The York Water Company (NASDAQ:YORW), Sonic Automotive Inc (NYSE:SAH), Community Trust Bancorp, Inc. (NASDAQ:CTBI), and Silvercorp Metals Inc. (NYSE:SVM). This group of stocks' market values are similar to RPAY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YORW,11,25816,3 SAH,14,17995,-2 CTBI,6,13575,0 SVM,5,31995,-3 Average,9,22345,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $113 million in RPAY's case. Sonic Automotive Inc (NYSE:SAH) is the most popular stock in this table. On the other hand Silvercorp Metals Inc. (NYSE:SVM) is the least popular one with only 5 bullish hedge fund positions. Repay Holdings Corporation (NASDAQ:RPAY) 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 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on RPAY as the stock returned 80.7% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.