Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of RADA Electronic Industries Ltd. (NASDAQ:RADA).
RADA Electronic Industries Ltd. (NASDAQ:RADA) investors should be aware of an increase in hedge fund sentiment in recent months. Our calculations also showed that RADA 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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'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_26044" align="aligncenter" width="359"] Ken Griffin of Citadel Investment Group[/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. Keeping this in mind we're going to take a gander at the key hedge fund action surrounding RADA Electronic Industries Ltd. (NASDAQ:RADA).
How are hedge funds trading RADA Electronic Industries Ltd. (NASDAQ:RADA)?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RADA over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, G2 Investment Partners Management was the largest shareholder of RADA Electronic Industries Ltd. (NASDAQ:RADA), with a stake worth $4.9 million reported as of the end of September. Trailing G2 Investment Partners Management was Renaissance Technologies, which amassed a stake valued at $2.3 million. PEAK6 Capital Management, PEAK6 Capital Management, and Citadel Investment 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 G2 Investment Partners Management allocated the biggest weight to RADA Electronic Industries Ltd. (NASDAQ:RADA), around 1.62% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to RADA.
As industrywide interest jumped, key hedge funds have been driving this bullishness. G2 Investment Partners Management, managed by Josh Goldberg, established the biggest position in RADA Electronic Industries Ltd. (NASDAQ:RADA). G2 Investment Partners Management had $4.9 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also initiated a $0.3 million position during the quarter. The other funds with brand new RADA positions are Ken Griffin's Citadel Investment Group, Greg Eisner's Engineers Gate Manager, and John Overdeck and David Siegel's Two Sigma Advisors.
Let's also examine hedge fund activity in other stocks similar to RADA Electronic Industries Ltd. (NASDAQ:RADA). These stocks are Regional Management Corp (NYSE:RM), The Joint Corp. (NASDAQ:JYNT), Washington Prime Group Inc. (NYSE:WPG), and Willis Lease Finance Corporation (NASDAQ:WLFC). This group of stocks' market caps are similar to RADA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RM,11,41732,-1 JYNT,15,43985,0 WPG,9,2080,0 WLFC,4,12461,-4 Average,9.75,25065,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $8 million in RADA's case. The Joint Corp. (NASDAQ:JYNT) is the most popular stock in this table. On the other hand Willis Lease Finance Corporation (NASDAQ:WLFC) is the least popular one with only 4 bullish hedge fund positions. RADA Electronic Industries Ltd. (NASDAQ:RADA) 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on RADA as the stock returned 80.6% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.