U.S. Markets closed

Is Sturm, Ruger & Company, Inc. (RGR) Going To Burn These Hedge Funds ?

Abigail Fisher

Is Sturm, Ruger & Company, Inc. (NYSE:RGR) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Sturm, Ruger & Company, Inc. (NYSE:RGR) has seen a decrease in hedge fund sentiment recently. Our calculations also showed that RGR isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Today there are a multitude of metrics stock market investors have at their disposal to grade publicly traded companies. A duo of the most under-the-radar metrics are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best fund managers can beat the S&P 500 by a solid margin (see the details here).

RGR_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the new hedge fund action encompassing Sturm, Ruger & Company, Inc. (NYSE:RGR).

What have hedge funds been doing with Sturm, Ruger & Company, Inc. (NYSE:RGR)?

Heading into the third quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in RGR 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.

Dmitry Balyasny

Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the number one position in Sturm, Ruger & Company, Inc. (NYSE:RGR). Renaissance Technologies has a $76.3 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $10.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions include Steve Cohen's Point72 Asset Management, Cliff Asness's AQR Capital Management and Ken Griffin's Citadel Investment Group.

Due to the fact that Sturm, Ruger & Company, Inc. (NYSE:RGR) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few hedge funds that elected to cut their full holdings last quarter. It's worth mentioning that Benjamin A. Smith's Laurion Capital Management dumped the biggest position of the 750 funds monitored by Insider Monkey, totaling about $0.7 million in stock, and Andrew Feldstein and Stephen Siderow's Blue Mountain Capital was right behind this move, as the fund dropped about $0.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 4 funds last quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Sturm, Ruger & Company, Inc. (NYSE:RGR) but similarly valued. These stocks are Alder Biopharmaceuticals Inc (NASDAQ:ALDR), Stewart Information Services Corp (NYSE:STC), Despegar.com, Corp. (NYSE:DESP), and NGM Biopharmaceuticals, Inc. (NASDAQ:NGM). All of these stocks' market caps match RGR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALDR,15,296719,0 STC,13,120760,-4 DESP,12,192901,-3 NGM,10,26704,10 Average,12.5,159271,0.75 [/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 $159 million. That figure was $111 million in RGR's case. Alder Biopharmaceuticals Inc (NASDAQ:ALDR) is the most popular stock in this table. On the other hand NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is the least popular one with only 10 bullish hedge fund positions. Sturm, Ruger & Company, Inc. (NYSE:RGR) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately RGR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on RGR were disappointed as the stock returned -23.1% during the third quarter 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 many of these stocks already outperformed the market so far this year.

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

Related Content