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We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Rockwell Medical Inc (NASDAQ:RMTI) based on that data.
Hedge fund interest in Rockwell Medical Inc (NASDAQ:RMTI) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Great Ajax Corp (NYSE:AJX), Hersha Hospitality Trust (NYSE:HT), and Evolus, Inc. (NASDAQ:EOLS) to gather more data points. Our calculations also showed that RMTI 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.
In the financial world there are several methods stock market investors employ to assess publicly traded companies. Two of the most underrated methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best investment managers can trounce their index-focused peers by a significant amount (see the details here).
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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, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital's Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to check out the recent hedge fund action regarding Rockwell Medical Inc (NASDAQ:RMTI).
What does smart money think about Rockwell Medical Inc (NASDAQ:RMTI)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RMTI over the last 18 quarters. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Rockwell Medical Inc (NASDAQ:RMTI), with a stake worth $0.3 million reported as of the end of September. Trailing Citadel Investment Group was Renaissance Technologies, which amassed a stake valued at $0.1 million. Marshall Wace LLP was 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 Marshall Wace LLP allocated the biggest weight to Rockwell Medical Inc (NASDAQ:RMTI), around 0.0008% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0001 percent of its 13F equity portfolio to RMTI.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: D E Shaw. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Marshall Wace LLP).
Let's now review hedge fund activity in other stocks similar to Rockwell Medical Inc (NASDAQ:RMTI). These stocks are Great Ajax Corp (NYSE:AJX), Hersha Hospitality Trust (NYSE:HT), Evolus, Inc. (NASDAQ:EOLS), and Bank of Commerce Holdings (NASDAQ:BOCH). This group of stocks' market values are closest to RMTI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AJX,6,5670,-2 HT,10,4305,-5 EOLS,12,30585,-3 BOCH,5,7941,-2 Average,8.25,12125,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $0 million in RMTI's case. Evolus, Inc. (NASDAQ:EOLS) is the most popular stock in this table. On the other hand Bank of Commerce Holdings (NASDAQ:BOCH) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Rockwell Medical Inc (NASDAQ:RMTI) is even less popular than BOCH. Hedge funds dodged a bullet by taking a bearish stance towards RMTI. 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 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately RMTI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); RMTI investors were disappointed as the stock returned 3.4% during the second quarter (through May 22nd) 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.