At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of December 31. In this article, we will use that wealth of knowledge to determine whether or not Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) makes for a good investment right now.
Is Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) undervalued? The smart money is taking a bearish view. The number of bullish hedge fund bets decreased by 3 recently. Our calculations also showed that rba isn't among the 30 most popular stocks among hedge funds.
In the eyes of most traders, hedge funds are viewed as slow, old investment vehicles of years past. While there are over 8000 funds with their doors open at present, We hone in on the crème de la crème of this group, about 750 funds. These money managers oversee bulk of the smart money's total asset base, and by paying attention to their first-class stock picks, Insider Monkey has found many investment strategies that have historically outstripped the S&P 500 index. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let's take a look at the recent hedge fund action encompassing Ritchie Bros. Auctioneers (NYSE:RBA).
How are hedge funds trading Ritchie Bros. Auctioneers Incorporated (NYSE:RBA)?
Heading into the first quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in RBA a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
The largest stake in Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) was held by Royce & Associates, which reported holding $52.6 million worth of stock at the end of September. It was followed by D E Shaw with a $10 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and Renaissance Technologies.
Since Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) has faced bearish sentiment from the smart money, it's safe to say that there is a sect of money managers who sold off their positions entirely by the end of the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dumped the largest position of all the hedgies tracked by Insider Monkey, valued at an estimated $8.6 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also sold off its stock, about $1.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks similar to Ritchie Bros. Auctioneers Incorporated (NYSE:RBA). These stocks are Echostar Corporation (NASDAQ:SATS), ViaSat, Inc. (NASDAQ:VSAT), Ingevity Corporation (NYSE:NGVT), and Umpqua Holdings Corp (NASDAQ:UMPQ). All of these stocks' market caps match RBA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SATS,34,422161,6 VSAT,19,1763482,1 NGVT,17,123490,-2 UMPQ,20,283820,0 Average,22.5,648238,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $648 million. That figure was $90 million in RBA's case. Echostar Corporation (NASDAQ:SATS) is the most popular stock in this table. On the other hand Ingevity Corporation (NYSE:NGVT) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) is even less popular than NGVT. Hedge funds dodged a bullet by taking a bearish stance towards RBA. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately RBA wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); RBA investors were disappointed as the stock returned 5.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.