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Insider Monkey has processed numerous 13F deposits of successful hedge funds and value investors to build a large database of hedge fund holdings. The 13F statement shows the positions of hedge funds and successful investors at the end of the third quarter. You can find articles on single hedge fund trading on numerous financial news websites. However, in this article we will take a look at their collective moves over the past 5 years and analyze what Riot Blockchain, Inc’s (NASDAQ: RIOT) smart money thinks based on that data.
IS Riot Blockchain, Inc (NASDAQ: RIOT) undervalued? Smart money was buying. The number of bullish bets on hedge funds has increased by 1 recently. Riot Blockchain, Inc (NASDAQ: RIOT) was in 4 hedge fund portfolios at the end of the third quarter of 2020. The all-time high for these statistics is 5. Our calculations also showed that RIOT is not among the 30 most popular stocks among hedge funds (click for the third quarter ranking and watch the video for a quick look at the top 5 stocks). At the end of June there were 3 hedge funds in our database with RIOT holdings. Video: Watch our video on the top 5 most popular hedge fund stocks.
The reputation of hedge funds as savvy investors has been tarnished over the past decade as their hedged returns have failed to keep up with unhedged returns from market indices. Our research has shown that hedge fund’s small cap stock choices managed to beat the double-digit market every year between 1999 and 2016, but the margin for outperformance has declined in recent years. However, we were still able to identify in advance a select group of hedge fund holdings that outperformed S&P 500 ETFs by 66 percentage points since March 2017 (see 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 per year between 2006 and 2017. Interestingly, the underperformance margin of these stocks increased over the years. last years. Investors who are long on the market and short on these stocks would have returned more than 27% per annum between 2015 and 2017. We have been monitoring and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Fred DiSanto of Ancora Advisors
In Insider Monkey we sift through multiple sources to discover the next great investment idea. For example, the Federal Reserve has electronically created trillions of dollars to keep interest rates close to zero. We believe this will lead to inflation and increase property prices. So, we have recommended this one real estate stock to our monthly premium newsletter subscribers. Let’s look at lists like 10 most profitable companies around the world to choose the best large cap stocks to buy. While we only recommend positions in a small fraction of the companies we analyze, we control as many stocks as possible. With all of this in mind, let’s take a look at the new hedge fund action regarding Riot Blockchain, Inc (NASDAQ: RIOT).
What have hedge funds done with Riot Blockchain, Inc (NASDAQ: RIOT)?
At the end of the third quarter, a total of 4 hedge funds tracked by Insider Monkey held long positions in this stock, a 33% change from the second quarter of 2020. The chart below shows the number of hedge funds with a bullish position in RIOT in the last 21 quarters. Next, let’s look at which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Looking at institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Riot Blockchain, Inc (NASDAQ: RIOT). Citadel Investment Group has a $ 1.3 million call position in the stock, comprising less than 0.1 %% of its 13F portfolio. In second place is CSat Investment Advisory, managed by Claes Fornell, which holds a position of $ 0.4 million; less than 0.1 %% of its 13F portfolio is assigned to the company. Other colleagues with similar optimism include Ken Griffin’s Citadel Investment Group, Frederick DiSanto’s Ancora Advisors and Michael Gelband’s ExodusPoint Capital. In terms of the portfolio weights assigned to each position, CSat Investment Advisory assigned the largest weight to Riot Blockchain, Inc (NASDAQ: RIOT), approximately 0.03% of its 13F portfolio. Still Advisors is also relatively very optimistic about the stock, allocating 0.01% of its 13F equity portfolio to RIOT.
As industry-wide interest increased, major hedge funds led this bullish trend. CSat Investment Advisory, managed by Claes Fornell, initiated the most valuable position in Riot Blockchain, Inc (NASDAQ: RIOT). CSat Investment Advisory had invested $ 0.4 million in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $ 0 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks, not necessarily in the same industry as Riot Blockchain, Inc (NASDAQ: RIOT) but similarly valued. These shares are Points International Ltd (NASDAQ: PCOM), Entravision Communications Corporation (NYSE: EVC), StoneCastle Financial Corp (NASDAQ: BANX), DarioHealth Corp. (NASDAQ: DRIO), Spark Networks SE (NYSE: LOV), Graham Corporation (NYSE: GHM) and Resonant Inc. (NASDAQ: RESN). The market capitalization of this group of shares resembles the market capitalization of RIOT.
[table] Ticker, number of HFs with positions, total value of HF positions (x1000), HF position change PCOM, 7,20124, -2 EVC, 9.15700, -1 BANX, 1.252.0 DRIO, 3.10982.1 LOV , 6.29375.1 GHM, 9.19016.1 RESN, 5.6733.0 Mean, 5.7.14597.0 [/table]See the table here if you are experiencing formatting problems.
As you can see, these stocks averaged 5.7 hedge funds with bullish positions and the average amount invested in these stocks was $ 15 million. That figure was $ 1 million in the RIOT case. Entravision Communications Corporation (NYSE: EVC) is the most popular stock in this table. On the other hand StoneCastle Financial Corp (NASDAQ: BANX) is the least popular with only 1 bullish hedge fund positions. Riot Blockchain, Inc (NASDAQ: RIOT) isn’t the least popular stock in this group, but hedge fund interest is still below average. Our overall hedge fund sentiment score for RIOT is 48.8. Stocks with a higher number of hedge fund positions than other stocks as well as their historical range receive a higher sentiment score. Our calculations showed that the top 20 most popular stocks among hedge funds 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 November 27 and still beat the market by 16.1 percentage points. Even a small number of hedge funds were right to bet on RIOT as the stock gained 131.5% since the end of the third quarter (through 11/27) and outperformed the market by an even greater margin.
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Disclosure: none. This article was originally published on Insider Monkey.
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