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Is Republic Bancorp, Inc. (RBCAA) Going to Burn These Hedge Funds?

·6 min read

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Republic Bancorp, Inc. (NASDAQ:RBCAA).

Republic Bancorp, Inc. (NASDAQ:RBCAA) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds' portfolios at the end of March. Our calculations also showed that RBCAA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare RBCAA to other stocks including Adecoagro SA (NYSE:AGRO), The Andersons, Inc. (NASDAQ:ANDE), and OneSpaWorld Holdings Limited (NASDAQ:OSW) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Roger Ibbotson of Zebra Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a glance at the recent hedge fund action surrounding Republic Bancorp, Inc. (NASDAQ:RBCAA).

Do Hedge Funds Think RBCAA Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in RBCAA a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Republic Bancorp, Inc. (NASDAQ:RBCAA) was held by Tontine Asset Management, which reported holding $7.6 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $1 million position. Other investors bullish on the company included Arrowstreet Capital, Zebra Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Tontine Asset Management allocated the biggest weight to Republic Bancorp, Inc. (NASDAQ:RBCAA), around 0.81% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.7 percent of its 13F equity portfolio to RBCAA.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Winton Capital Management. 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 Citadel Investment Group).

Let's now review hedge fund activity in other stocks similar to Republic Bancorp, Inc. (NASDAQ:RBCAA). We will take a look at Adecoagro SA (NYSE:AGRO), The Andersons, Inc. (NASDAQ:ANDE), OneSpaWorld Holdings Limited (NASDAQ:OSW), PBF Logistics LP (NYSE:PBFX), Apartment Investment and Management Co. (NYSE:AIV), Banc of California, Inc. (NYSE:BANC), and U.S. Silica Holdings Inc (NYSE:SLCA). This group of stocks' market caps are similar to RBCAA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGRO,14,242146,4 ANDE,12,21539,0 OSW,11,130954,-1 PBFX,3,673,-1 AIV,18,157085,1 BANC,14,51439,3 SLCA,18,191248,1 Average,12.9,113583,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $11 million in RBCAA's case. Apartment Investment and Management Co. (NYSE:AIV) is the most popular stock in this table. On the other hand PBF Logistics LP (NYSE:PBFX) is the least popular one with only 3 bullish hedge fund positions. Republic Bancorp, Inc. (NASDAQ:RBCAA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RBCAA is 30.4. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately RBCAA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); RBCAA investors were disappointed as the stock returned 2.9% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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