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Hedge Funds Are Piling Into Raven Industries, Inc. (RAVN)

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  • ^GSPC

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Raven Industries, Inc. (NASDAQ:RAVN).

Raven Industries, Inc. (NASDAQ:RAVN) was in 22 hedge funds' portfolios at the end of June. The all time high for this statistic was previously 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. RAVN investors should be aware of an increase in activity from the world's largest hedge funds recently. There were 16 hedge funds in our database with RAVN holdings at the end of March. Our calculations also showed that RAVN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To the average investor there are many gauges stock market investors use to appraise stocks. Two of the best gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best fund managers can outperform the S&P 500 by a very impressive margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Matthew Halbower Pentwater Capital
Matthew Halbower Pentwater Capital

Matthew Halbower of Pentwater Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we're going to view the new hedge fund action surrounding Raven Industries, Inc. (NASDAQ:RAVN).

Do Hedge Funds Think RAVN Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in RAVN a year ago. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Is RAVN A Good Stock To Buy?
Is RAVN A Good Stock To Buy?

Among these funds, Magnetar Capital held the most valuable stake in Raven Industries, Inc. (NASDAQ:RAVN), which was worth $110.3 million at the end of the second quarter. On the second spot was ARK Investment Management which amassed $47.9 million worth of shares. Pentwater Capital Management, Balyasny Asset Management, and Balyasny Asset 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 Magnetar Capital allocated the biggest weight to Raven Industries, Inc. (NASDAQ:RAVN), around 1.04% of its 13F portfolio. Athos Capital is also relatively very bullish on the stock, setting aside 0.95 percent of its 13F equity portfolio to RAVN.

As one would reasonably expect, key hedge funds were breaking ground themselves. Magnetar Capital, managed by Alec Litowitz and Ross Laser, initiated the most outsized position in Raven Industries, Inc. (NASDAQ:RAVN). Magnetar Capital had $110.3 million invested in the company at the end of the quarter. Matthew Halbower's Pentwater Capital Management also made a $27.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny's Balyasny Asset Management, Dmitry Balyasny's Balyasny Asset Management, and Robert Emil Zoellner's Alpine Associates.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Raven Industries, Inc. (NASDAQ:RAVN) but similarly valued. We will take a look at Equinox Gold Corp. (NYSE:EQX), Service Properties Trust (NASDAQ:SVC), Empire State Realty Trust Inc (NYSE:ESRT), 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), GMS Inc. (NYSE:GMS), USANA Health Sciences, Inc. (NYSE:USNA), and Translate Bio, Inc. (NASDAQ:TBIO). This group of stocks' market caps match RAVN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EQX,16,66615,1 SVC,13,144696,-5 ESRT,15,189893,4 FLWS,24,93097,2 GMS,19,321204,0 USNA,21,236661,2 TBIO,17,667464,-3 Average,17.9,245661,0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $246 million. That figure was $265 million in RAVN's case. 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) is the most popular stock in this table. On the other hand Service Properties Trust (NASDAQ:SVC) is the least popular one with only 13 bullish hedge fund positions. Raven Industries, Inc. (NASDAQ:RAVN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RAVN is 80.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately RAVN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on RAVN were disappointed as the stock returned -0.2% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.