The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Rollins, Inc. (NYSE:ROL) based on those filings.
Is ROL stock a buy? Prominent investors were selling. The number of long hedge fund positions shrunk by 1 in recent months. Rollins, Inc. (NYSE:ROL) was in 28 hedge funds' portfolios at the end of December. The all time high for this statistic is 34. Our calculations also showed that ROL isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 29 hedge funds in our database with ROL positions at the end of the third quarter.
Tom Gayner of Markel Gayner Asset Management
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Do Hedge Funds Think ROL Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ROL over the last 22 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Rollins, Inc. (NYSE:ROL) was held by Select Equity Group, which reported holding $239.8 million worth of stock at the end of December. It was followed by GAMCO Investors with a $114.9 million position. Other investors bullish on the company included AQR Capital Management, Markel Gayner Asset Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Value Holdings LP allocated the biggest weight to Rollins, Inc. (NYSE:ROL), around 10% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, earmarking 1.38 percent of its 13F equity portfolio to ROL.
Due to the fact that Rollins, Inc. (NYSE:ROL) has faced falling interest from the smart money, logic holds that there is a sect of hedge funds that slashed their entire stakes by the end of the fourth quarter. Intriguingly, Benjamin A. Smith's Laurion Capital Management dumped the largest investment of the 750 funds monitored by Insider Monkey, comprising close to $1.1 million in stock, and Parvinder Thiara's Athanor Capital was right behind this move, as the fund said goodbye to about $1.1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds by the end of the fourth quarter.
Let's also examine hedge fund activity in other stocks similar to Rollins, Inc. (NYSE:ROL). These stocks are Teleflex Incorporated (NYSE:TFX), Kansas City Southern (NYSE:KSU), Fortis Inc. (NYSE:FTS), Incyte Corporation (NASDAQ:INCY), Vipshop Holdings Limited (NYSE:VIPS), ORIX Corporation (NYSE:IX), and Ingersoll Rand Inc. (NYSE:IR). This group of stocks' market valuations resemble ROL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TFX,30,790658,-10 KSU,49,1020598,-4 FTS,9,206819,1 INCY,37,3891495,2 VIPS,27,524692,3 IX,3,4453,-1 IR,34,939520,8 Average,27,1054034,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1054 million. That figure was $645 million in ROL's case. Kansas City Southern (NYSE:KSU) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 3 bullish hedge fund positions. Rollins, Inc. (NYSE:ROL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ROL is 55.9. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately ROL wasn't nearly as popular as these 30 stocks and hedge funds that were betting on ROL were disappointed as the stock returned -10.7% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.