Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Riot Blockchain, Inc (NASDAQ:RIOT) based on that data.
Is Riot Blockchain, Inc (NASDAQ:RIOT) undervalued? The smart money was buying. The number of bullish hedge fund bets increased by 1 recently. Riot Blockchain, Inc (NASDAQ:RIOT) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 5. Our calculations also showed that RIOT 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). There were 3 hedge funds in our database with RIOT holdings at the end of June. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 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.
Fred DiSanto of Ancora Advisors
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 10 most profitable companies in the world 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. With all of this in mind let’s take a look at the fresh hedge fund action regarding Riot Blockchain, Inc (NASDAQ:RIOT).
What have hedge funds been doing with Riot Blockchain, Inc (NASDAQ:RIOT)?
At third quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in RIOT over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest 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. Sitting at the No. 2 spot is CSat Investment Advisory, managed by Claes Fornell, which holds a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers with similar optimism encompass 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 allocated the biggest weight to Riot Blockchain, Inc (NASDAQ:RIOT), around 0.03% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to RIOT.
As industrywide interest jumped, key hedge funds have been driving this bullishness. CSat Investment Advisory, managed by Claes Fornell, initiated the most valuable position in Riot Blockchain, Inc (NASDAQ:RIOT). CSat Investment Advisory had $0.4 million invested 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 stocks 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). This group of stocks’ market caps resemble RIOT’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position 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 Average,5.7,14597,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.7 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $1 million in RIOT’s 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 one with only 1 bullish hedge fund positions. Riot Blockchain, Inc (NASDAQ:RIOT) is not 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 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 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 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on RIOT as the stock returned 131.5% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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