Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Rush Enterprises, Inc. (NASDAQ:RUSHA) ready to rally soon? The smart money is taking a bearish view. The number of long hedge fund bets shrunk by 2 lately. Our calculations also showed that rusha isn't among the 30 most popular stocks among hedge funds.
If you'd ask most market participants, hedge funds are viewed as worthless, outdated financial tools of yesteryear. While there are greater than 8000 funds trading today, We choose to focus on the upper echelon of this group, about 750 funds. These money managers preside over most of the smart money's total capital, and by tracking their highest performing picks, Insider Monkey has revealed numerous investment strategies that have historically outpaced Mr. Market. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
Let's check out the fresh hedge fund action encompassing Rush Enterprises, Inc. (NASDAQ:RUSHA).
What does the smart money think about Rush Enterprises, Inc. (NASDAQ:RUSHA)?
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards RUSHA over the last 15 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, Renaissance Technologies was the largest shareholder of Rush Enterprises, Inc. (NASDAQ:RUSHA), with a stake worth $34.9 million reported as of the end of March. Trailing Renaissance Technologies was Park West Asset Management, which amassed a stake valued at $13.7 million. Millennium Management, Prescott Group Capital Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Rush Enterprises, Inc. (NASDAQ:RUSHA) has witnessed declining sentiment from the aggregate hedge fund industry, it's safe to say that there were a few money managers who were dropping their positions entirely by the end of the third quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP sold off the biggest position of the 700 funds monitored by Insider Monkey, worth about $6.3 million in stock, and Richard S. Meisenberg's ACK Asset Management was right behind this move, as the fund dropped about $5.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Rush Enterprises, Inc. (NASDAQ:RUSHA). We will take a look at Big Lots, Inc. (NYSE:BIG), Mobile Mini Inc (NASDAQ:MINI), Aircastle Limited (NYSE:AYR), and Vector Group Ltd (NYSE:VGR). All of these stocks' market caps are closest to RUSHA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BIG,20,179321,1 MINI,14,96722,-1 AYR,12,82003,-1 VGR,22,171934,2 Average,17,132495,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $102 million in RUSHA's case. Vector Group Ltd (NYSE:VGR) is the most popular stock in this table. On the other hand Aircastle Limited (NYSE:AYR) is the least popular one with only 12 bullish hedge fund positions. Rush Enterprises, Inc. (NASDAQ:RUSHA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately RUSHA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on RUSHA were disappointed as the stock returned -14.3% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.