We at Insider Monkey have gone over 866 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. In this article, we look at what those funds think of Rambus Inc. (NASDAQ:RMBS) based on that data.
Hedge fund interest in Rambus Inc. (NASDAQ:RMBS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that RMBS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare RMBS to other stocks including DiamondRock Hospitality Company (NYSE:DRH), Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB), and Calix Inc (NYSE:CALX) to get a better sense of its popularity.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Joel Greenblatt Gotham Asset Management
Joel Greenblatt of Gotham Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to view the fresh hedge fund action encompassing Rambus Inc. (NASDAQ:RMBS).
Do Hedge Funds Think RMBS Is A Good Stock To Buy Now?
At Q1's end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in RMBS a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Lynrock Lake held the most valuable stake in Rambus Inc. (NASDAQ:RMBS), which was worth $127.7 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $29.6 million worth of shares. D E Shaw, Lynrock Lake, and Arrowstreet Capital 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 Barington Capital Group allocated the biggest weight to Rambus Inc. (NASDAQ:RMBS), around 10.85% of its 13F portfolio. Lynrock Lake is also relatively very bullish on the stock, dishing out 8.35 percent of its 13F equity portfolio to RMBS.
Seeing as Rambus Inc. (NASDAQ:RMBS) has experienced bearish sentiment from hedge fund managers, it's safe to say that there were a few funds who sold off their entire stakes by the end of the first quarter. It's worth mentioning that Paul Tudor Jones's Tudor Investment Corp dropped the largest stake of all the hedgies watched by Insider Monkey, worth an estimated $2.6 million in stock, and Valerie Malter's Matarin Capital was right behind this move, as the fund dumped about $2.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Rambus Inc. (NASDAQ:RMBS). These stocks are DiamondRock Hospitality Company (NYSE:DRH), Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB), Calix Inc (NYSE:CALX), Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), WW International, Inc. (NASDAQ:WW), ON24, Inc. (NYSE:ONTF), and Piedmont Office Realty Trust, Inc. (NYSE:PDM). This group of stocks' market caps are similar to RMBS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DRH,11,118667,-2 OMAB,4,29537,-1 CALX,31,273135,6 SBGI,19,396417,-10 WW,28,466061,-4 ONTF,19,117781,19 PDM,13,81180,2 Average,17.9,211825,1.4 [/table]
As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $295 million in RMBS's case. Calix Inc (NYSE:CALX) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) is the least popular one with only 4 bullish hedge fund positions. Rambus Inc. (NASDAQ:RMBS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RMBS is 68.9. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on RMBS, though not to the same extent, as the stock returned 16.2% since Q1 (through July 16th) and outperformed the market as well.
Get real-time email alerts: Follow Rambus Inc (NASDAQ:RMBS)
