The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Republic Bancorp, Inc (NASDAQ:RBCAA) based on those filings.
Is Republic Bancorp, Inc. (NASDAQ:RBCAA) undervalued? The best stock pickers are in a bearish mood. The number of bullish hedge fund positions shrunk by 3 in recent months. Our calculations also showed that RBCAA 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). RBCAA was in 5 hedge funds' portfolios at the end of the first quarter of 2020. There were 8 hedge funds in our database with RBCAA holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are a large number of formulas investors use to size up their stock investments. A duo of the most under-the-radar formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outperform the market by a superb margin (see the details here).
[caption id="attachment_728717" align="aligncenter" width="398"] Roger Ibbotson of Zebra Capital Management[/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. Now we're going to take a look at the new hedge fund action encompassing Republic Bancorp, Inc. (NASDAQ:RBCAA).
How are hedge funds trading Republic Bancorp, Inc. (NASDAQ:RBCAA)?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in RBCAA a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Tontine Asset Management was the largest shareholder of Republic Bancorp, Inc. (NASDAQ:RBCAA), with a stake worth $4 million reported as of the end of September. Trailing Tontine Asset Management was Renaissance Technologies, which amassed a stake valued at $3.5 million. Winton Capital Management, Zebra 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 Tontine Asset Management allocated the biggest weight to Republic Bancorp, Inc. (NASDAQ:RBCAA), around 1.23% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, designating 0.64 percent of its 13F equity portfolio to RBCAA.
Seeing as Republic Bancorp, Inc. (NASDAQ:RBCAA) has experienced falling interest from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds that slashed their full holdings in the first quarter. At the top of the heap, Israel Englander's Millennium Management sold off the largest stake of the "upper crust" of funds watched by Insider Monkey, worth close to $0.9 million in stock, and Noam Gottesman's GLG Partners was right behind this move, as the fund said goodbye to about $0.5 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 3 funds in the first quarter.
Let's also examine hedge fund activity in other stocks similar to Republic Bancorp, Inc. (NASDAQ:RBCAA). These stocks are GreenSky, Inc. (NASDAQ:GSKY), Associated Capital Group, Inc. (NYSE:AC), Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), and NextGen Healthcare, Inc. (NASDAQ:NXGN). All of these stocks' market caps resemble RBCAA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSKY,9,14686,-3 AC,6,53890,0 AMPH,6,19619,0 NXGN,21,26574,5 Average,10.5,28692,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $9 million in RBCAA's case. NextGen Healthcare, Inc. (NASDAQ:NXGN) is the most popular stock in this table. On the other hand Associated Capital Group, Inc. (NYSE:AC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Republic Bancorp, Inc. (NASDAQ:RBCAA) is even less popular than AC. Hedge funds dodged a bullet by taking a bearish stance towards RBCAA. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately RBCAA wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); RBCAA investors were disappointed as the stock returned -3% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.