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 The RMR Group Inc. (NASDAQ:RMR) based on that data.
The RMR Group Inc. (NASDAQ:RMR) has experienced a decrease in hedge fund interest of late. Our calculations also showed that RMR 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.
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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_671014" align="aligncenter" width="392"] David Brown of Hawk Ridge Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the latest hedge fund action encompassing The RMR Group Inc. (NASDAQ:RMR).
How have hedgies been trading The RMR Group Inc. (NASDAQ:RMR)?
Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RMR over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The RMR Group Inc. (NASDAQ:RMR) was held by Hawk Ridge Management, which reported holding $23.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $17.6 million position. Other investors bullish on the company included Engine Capital, Royce & Associates, and V3 Capital. In terms of the portfolio weights assigned to each position Hill Winds Capital allocated the biggest weight to The RMR Group Inc. (NASDAQ:RMR), around 5.68% of its 13F portfolio. Engine Capital is also relatively very bullish on the stock, earmarking 5.25 percent of its 13F equity portfolio to RMR.
Due to the fact that The RMR Group Inc. (NASDAQ:RMR) has witnessed bearish sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of hedgies who sold off their full holdings by the end of the first quarter. Intriguingly, Stuart J. Zimmer's Zimmer Partners said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, valued at an estimated $9.3 million in stock, and Bo Shan's Gobi Capital was right behind this move, as the fund said goodbye to about $7.7 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 7 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks similar to The RMR Group Inc. (NASDAQ:RMR). We will take a look at Revance Therapeutics Inc (NASDAQ:RVNC), ePlus Inc. (NASDAQ:PLUS), MaxLinear, Inc. (NYSE:MXL), and Community Healthcare Trust Inc (NYSE:CHCT). This group of stocks' market values resemble RMR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RVNC,11,49067,-5 PLUS,13,31309,0 MXL,13,28040,-4 CHCT,12,86149,-2 Average,12.25,48641,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $77 million in RMR's case. ePlus Inc. (NASDAQ:PLUS) is the most popular stock in this table. On the other hand Revance Therapeutics Inc (NASDAQ:RVNC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks The RMR Group Inc. (NASDAQ:RMR) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. Unfortunately RMR wasn't nearly as popular as these 10 stocks and hedge funds that were betting on RMR were disappointed as the stock returned 10.8% during the second quarter (through June 25th) 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.