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Rush Enterprises, Inc. (RUSHB): Are Hedge Funds Right About This Stock?

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Abigail Fisher
·6 min read
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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 Rush Enterprises, Inc. (NASDAQ:RUSHB) based on that data.

Rush Enterprises, Inc. (NASDAQ:RUSHB) has seen a decrease in hedge fund interest lately. Our calculations also showed that RUSHB 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.

In the eyes of most market participants, hedge funds are seen as unimportant, outdated financial tools of years past. While there are more than 8000 funds trading today, Our researchers hone in on the elite of this club, about 850 funds. It is estimated that this group of investors oversee most of the hedge fund industry's total capital, and by watching their finest investments, Insider Monkey has revealed many investment strategies that have historically outperformed the market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

[caption id="attachment_375529" align="aligncenter" width="399"]

Mario Gabelli of GAMCO Investors[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital's Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to view the fresh hedge fund action regarding Rush Enterprises, Inc. (NASDAQ:RUSHB).

How are hedge funds trading Rush Enterprises, Inc. (NASDAQ:RUSHB)?

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in RUSHB a year ago. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

More specifically, GAMCO Investors was the largest shareholder of Rush Enterprises, Inc. (NASDAQ:RUSHB), with a stake worth $18.6 million reported as of the end of September. Trailing GAMCO Investors was Renaissance Technologies, which amassed a stake valued at $8.4 million. Ancora Advisors was 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 GAMCO Investors allocated the biggest weight to Rush Enterprises, Inc. (NASDAQ:RUSHB), around 0.22% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to RUSHB.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. 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 none of the 750+ hedge funds tracked by Insider Monkey identified RUSHB as a viable investment and initiated a position in the stock.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Rush Enterprises, Inc. (NASDAQ:RUSHB) but similarly valued. We will take a look at National HealthCare Corporation (NYSE:NHC), Kontoor Brands, Inc. (NYSE:KTB), Banco Macro SA (NYSE:BMA), and Deluxe Corporation (NYSE:DLX). This group of stocks' market valuations are closest to RUSHB's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NHC,11,55616,0 KTB,16,33264,2 BMA,8,55211,1 DLX,15,63014,-14 Average,12.5,51776,-2.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $27 million in RUSHB's case. Kontoor Brands, Inc. (NYSE:KTB) is the most popular stock in this table. On the other hand Banco Macro SA (NYSE:BMA) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Rush Enterprises, Inc. (NASDAQ:RUSHB) is even less popular than BMA. Hedge funds dodged a bullet by taking a bearish stance towards RUSHB. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately RUSHB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); RUSHB investors were disappointed as the stock returned 11.5% during the second quarter (through May 22nd) 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 so far in 2020.

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

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