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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards RadNet Inc. (NASDAQ:RDNT).
Is RDNT a good stock to buy now? RadNet Inc. (NASDAQ:RDNT) has seen a decrease in activity from the world's largest hedge funds lately. RadNet Inc. (NASDAQ:RDNT) was in 13 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. Our calculations also showed that RDNT isn't among the 30 most popular stocks among hedge funds (click for Q3 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In the eyes of most stock holders, hedge funds are viewed as unimportant, outdated investment vehicles of the past. While there are greater than 8000 funds in operation at present, Our researchers hone in on the aristocrats of this club, approximately 850 funds. These investment experts administer bulk of the smart money's total capital, and by keeping track of their best equity investments, Insider Monkey has brought to light numerous investment strategies that have historically exceeded the market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Michael Castor of Sio Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we're going to go over the fresh hedge fund action regarding RadNet Inc. (NASDAQ:RDNT).
Do Hedge Funds Think RDNT Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in RDNT a year ago. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in RadNet Inc. (NASDAQ:RDNT), worth close to $22.8 million, amounting to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies's heels is Tamarack Capital Management, led by Justin John Ferayorni, holding a $9.6 million position; the fund has 3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions consist of J. Daniel Plants's Voce Capital, Chuck Royce's Royce & Associates and Michael Castor's Sio Capital. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to RadNet Inc. (NASDAQ:RDNT), around 2.96% of its 13F portfolio. Voce Capital is also relatively very bullish on the stock, setting aside 2.23 percent of its 13F equity portfolio to RDNT.
Seeing as RadNet Inc. (NASDAQ:RDNT) has faced a decline in interest from hedge fund managers, logic holds that there lies a certain "tier" of funds that slashed their positions entirely in the third quarter. At the top of the heap, Roger Ibbotson's Zebra Capital Management cut the biggest investment of the 750 funds followed by Insider Monkey, worth close to $0.4 million in stock. Cliff Asness's fund, AQR Capital Management, also said goodbye to its stock, about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to RadNet Inc. (NASDAQ:RDNT). We will take a look at Columbus McKinnon Corporation (NASDAQ:CMCO), ArcBest Corp (NASDAQ:ARCB), Cellectis SA (NASDAQ:CLLS), 1st Source Corporation (NASDAQ:SRCE), RAPT Therapeutics, Inc. (NASDAQ:RAPT), Akouos, Inc. (NASDAQ:AKUS), and Gogo Inc (NASDAQ:GOGO). This group of stocks' market valuations resemble RDNT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMCO,17,32949,0 ARCB,17,66107,5 CLLS,8,20311,-5 SRCE,10,19677,0 RAPT,16,45437,9 AKUS,12,178200,-8 GOGO,14,165265,-4 Average,13.4,75421,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $54 million in RDNT's case. Columbus McKinnon Corporation (NASDAQ:CMCO) is the most popular stock in this table. On the other hand Cellectis SA (NASDAQ:CLLS) is the least popular one with only 8 bullish hedge fund positions. RadNet Inc. (NASDAQ:RDNT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RDNT is 56.2. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on RDNT as the stock returned 25.4% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.