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Hedge Funds Watching Randolph Bancorp, Inc. (RNDB) From Afar

Reymerlyn Martin

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Randolph Bancorp, Inc. (NASDAQ:RNDB).

Randolph Bancorp, Inc. (NASDAQ:RNDB) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 2 hedge funds' portfolios at the end of the third quarter of 2019. At the end of this article we will also compare RNDB to other stocks including Portman Ridge Finance Corporation (NASDAQ:PTMN), MSB Financial Corp. (NASDAQ:MSBF), and Jerash Holdings (US), Inc. (NASDAQ:JRSH) to get a better sense of its popularity.

If you'd ask most traders, hedge funds are perceived as slow, old financial tools of the past. While there are greater than 8000 funds trading at present, Our researchers choose to focus on the bigwigs of this club, about 750 funds. These hedge fund managers shepherd most of the smart money's total asset base, and by paying attention to their inimitable stock picks, Insider Monkey has revealed a number of investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Xiniya Earnings Call Transcript XNY 2014 Q3

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let's review the recent hedge fund action surrounding Randolph Bancorp, Inc. (NASDAQ:RNDB).

What have hedge funds been doing with Randolph Bancorp, Inc. (NASDAQ:RNDB)?

At the end of the third quarter, a total of 2 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in RNDB a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

RNDB_nov2019

The largest stake in Randolph Bancorp, Inc. (NASDAQ:RNDB) was held by EJF Capital, which reported holding $5.5 million worth of stock at the end of September. It was followed by Seidman Investment Partnership with a $1.2 million position.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.

Let's go over hedge fund activity in other stocks similar to Randolph Bancorp, Inc. (NASDAQ:RNDB). These stocks are Portman Ridge Finance Corporation (NASDAQ:PTMN), MSB Financial Corp. (NASDAQ:MSBF), Jerash Holdings (US), Inc. (NASDAQ:JRSH), and J. Jill, Inc. (NYSE:JILL). This group of stocks' market caps match RNDB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PTMN,3,1093,-1 MSBF,3,13893,0 JRSH,3,1469,2 JILL,6,2206,-2 Average,3.75,4665,-0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $7 million in RNDB's case. J. Jill, Inc. (NYSE:JILL) is the most popular stock in this table. On the other hand Portman Ridge Finance Corporation (NASDAQ:PTMN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Randolph Bancorp, Inc. (NASDAQ:RNDB) is even less popular than PTMN. Hedge funds clearly dropped the ball on RNDB as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. A small number of hedge funds were also right about betting on RNDB as the stock returned 10.2% during the fourth quarter (through 11/22) and outperformed the market by an even larger margin.

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

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