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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Rackspace Technology, Inc. (NASDAQ:RXT).
Is RXT a good stock to buy now? Money managers were taking a bullish view. The number of bullish hedge fund positions went up by 15 recently. Rackspace Technology, Inc. (NASDAQ:RXT) was in 15 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that RXT 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.
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Stuart Zimmer of Zimmer Partners
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. Keeping this in mind we're going to analyze the recent hedge fund action encompassing Rackspace Technology, Inc. (NASDAQ:RXT).
Do Hedge Funds Think RXT Is A Good Stock To Buy Now?
At Q3's end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in RXT a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Point72 Asset Management held the most valuable stake in Rackspace Technology, Inc. (NASDAQ:RXT), which was worth $45.5 million at the end of the third quarter. On the second spot was Rubric Capital Management which amassed $37.7 million worth of shares. Alyeska Investment Group, MSDC Management, and Zimmer Partners 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 Rubric Capital Management allocated the biggest weight to Rackspace Technology, Inc. (NASDAQ:RXT), around 3.51% of its 13F portfolio. MSDC Management is also relatively very bullish on the stock, dishing out 2.1 percent of its 13F equity portfolio to RXT.
As aggregate interest increased, key hedge funds have jumped into Rackspace Technology, Inc. (NASDAQ:RXT) headfirst. Point72 Asset Management, managed by Steve Cohen, established the biggest position in Rackspace Technology, Inc. (NASDAQ:RXT). Point72 Asset Management had $45.5 million invested in the company at the end of the quarter. David Rosen's Rubric Capital Management also made a $37.7 million investment in the stock during the quarter. The other funds with brand new RXT positions are Anand Parekh's Alyeska Investment Group, Marc Lisker, Glenn Fuhrman and John Phelan's MSDC Management, and Stuart J. Zimmer's Zimmer Partners.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Rackspace Technology, Inc. (NASDAQ:RXT) but similarly valued. These stocks are New York Community Bancorp, Inc. (NYSE:NYCB), Relay Therapeutics, Inc. (NASDAQ:RLAY), Penske Automotive Group, Inc. (NYSE:PAG), National General Holdings Corp (NASDAQ:NGHC), ICU Medical, Inc. (NASDAQ:ICUI), Tenable Holdings, Inc. (NASDAQ:TENB), and Regal Beloit Corporation (NYSE:RBC). All of these stocks' market caps match RXT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NYCB,28,218403,0 RLAY,18,733691,18 PAG,18,107356,-3 NGHC,25,489741,8 ICUI,31,295797,-1 TENB,30,490303,8 RBC,25,241763,3 Average,25,368151,4.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $368 million. That figure was $143 million in RXT's case. ICU Medical, Inc. (NASDAQ:ICUI) is the most popular stock in this table. On the other hand Relay Therapeutics, Inc. (NASDAQ:RLAY) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Rackspace Technology, Inc. (NASDAQ:RXT) is even less popular than RLAY. Our overall hedge fund sentiment score for RXT is 10. 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. Hedge funds dodged a bullet by taking a bearish stance towards RXT. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th but managed to beat the market again by 15.8 percentage points. Unfortunately RXT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); RXT investors were disappointed as the stock returned 6.7% since the end of the third quarter (through 12/14) 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 most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.