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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Rambus Inc. (NASDAQ:RMBS) based on those filings.
Is RMBS stock a buy? The smart money was in a bullish mood. The number of bullish hedge fund bets improved by 4 lately. Rambus Inc. (NASDAQ:RMBS) was in 23 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 24. Our calculations also showed that RMBS isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 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.
Paul Tudor Jones of Tudor Investment Corp
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Do Hedge Funds Think RMBS Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RMBS over the last 22 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Lynrock Lake was the largest shareholder of Rambus Inc. (NASDAQ:RMBS), with a stake worth $95.9 million reported as of the end of December. Trailing Lynrock Lake was Renaissance Technologies, which amassed a stake valued at $44.9 million. D E Shaw, Arrowstreet Capital, and Two Sigma Advisors were 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 Barington Capital Group allocated the biggest weight to Rambus Inc. (NASDAQ:RMBS), around 10.98% of its 13F portfolio. Lynrock Lake is also relatively very bullish on the stock, designating 7.34 percent of its 13F equity portfolio to RMBS.
As aggregate interest increased, specific money managers were leading the bulls' herd. Lynrock Lake, managed by Cynthia Paul, created the most outsized position in Rambus Inc. (NASDAQ:RMBS). Lynrock Lake had $11.3 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $2.6 million position during the quarter. The other funds with brand new RMBS positions are Charles Davidson and Joseph Jacobs's Wexford Capital, David Harding's Winton Capital Management, and Parvinder Thiara's Athanor Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Rambus Inc. (NASDAQ:RMBS) but similarly valued. These stocks are Owens & Minor, Inc. (NYSE:OMI), Telephone & Data Systems, Inc. (NYSE:TDS), Axonics, Inc. (NASDAQ:AXNX), Nova Measuring Instruments Ltd. (NASDAQ:NVMI), SJW Corp. (NYSE:SJW), World Fuel Services Corporation (NYSE:INT), and Grupo Simec S.A.B. de C.V. (NYSE:SIM). This group of stocks' market caps match RMBS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OMI,20,259571,1 TDS,24,210717,-3 AXNX,26,276343,-2 NVMI,16,286770,5 SJW,8,72871,-1 INT,18,85718,2 SIM,1,3293,0 Average,16.1,170755,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $258 million in RMBS's case. Axonics, Inc. (NASDAQ:AXNX) is the most popular stock in this table. On the other hand Grupo Simec S.A.B. de C.V. (NYSE:SIM) is the least popular one with only 1 bullish hedge fund positions. Rambus Inc. (NASDAQ:RMBS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RMBS is 81.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on RMBS as the stock returned 14.1% since the end of Q4 (through 4/19) 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.