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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Regis Corporation (NYSE:RGS) in this article.
Is RGS a good stock to buy now? Regis Corporation (NYSE:RGS) was in 12 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 18. RGS shareholders have witnessed an increase in activity from the world's largest hedge funds recently. There were 10 hedge funds in our database with RGS holdings at the end of June. Our calculations also showed that RGS 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 financial world there are a multitude of tools investors have at their disposal to evaluate publicly traded companies. Two of the most innovative tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a very impressive margin (see the details here).
Paul Marshall of Marshall Wace
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 view the key hedge fund action encompassing Regis Corporation (NYSE:RGS).
Do Hedge Funds Think RGS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RGS over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Regis Corporation (NYSE:RGS) was held by Birch Run Capital, which reported holding $65.4 million worth of stock at the end of September. It was followed by Luxor Capital Group with a $5.7 million position. Other investors bullish on the company included Royce & Associates, Arrowstreet Capital, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Birch Run Capital allocated the biggest weight to Regis Corporation (NYSE:RGS), around 45.56% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to RGS.
Consequently, specific money managers have been driving this bullishness. Clearline Capital, managed by Marc Majzner, established the largest position in Regis Corporation (NYSE:RGS). Clearline Capital had $0.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $0.2 million position during the quarter. The other funds with brand new RGS positions are Donald Sussman's Paloma Partners and Ken Griffin's Citadel Investment Group.
Let's check out hedge fund activity in other stocks similar to Regis Corporation (NYSE:RGS). We will take a look at QEP Resources Inc (NYSE:QEP), Ryerson Holding Corporation (NYSE:RYI), Fulcrum Therapeutics, Inc. (NASDAQ:FULC), Houghton Mifflin Harcourt Co (NASDAQ:HMHC), P.A.M. Transportation Services, Inc. (NASDAQ:PTSI), Transcat, Inc. (NASDAQ:TRNS), and Accuray Incorporated (NASDAQ:ARAY). This group of stocks' market valuations resemble RGS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QEP,14,21907,-5 RYI,13,10861,0 FULC,10,40391,-1 HMHC,17,58828,-3 PTSI,1,13714,0 TRNS,7,48914,-2 ARAY,16,40601,2 Average,11.1,33602,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $85 million in RGS's case. Houghton Mifflin Harcourt Co (NASDAQ:HMHC) is the most popular stock in this table. On the other hand P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) is the least popular one with only 1 bullish hedge fund positions. Regis Corporation (NYSE:RGS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RGS is 61.4. 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. 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. Hedge funds were also right about betting on RGS as the stock returned 51.5% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.