Where Do Hedge Funds Stand On Range Resources Corp. (RRC)?

·6 min read

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 June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Range Resources Corp. (NYSE:RRC) based on those filings.

Range Resources Corp. (NYSE:RRC) was in 25 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 46. RRC has experienced a decrease in enthusiasm from smart money recently. There were 26 hedge funds in our database with RRC positions at the end of the first quarter. Our calculations also showed that RRC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Sander Gerber of Hudson Bay Capital
Sander Gerber of Hudson Bay Capital

Sander Gerber of Hudson Bay Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 take a peek at the fresh hedge fund action encompassing Range Resources Corp. (NYSE:RRC).

Do Hedge Funds Think RRC Is A Good Stock To Buy Now?

At Q2's end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RRC over the last 24 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

More specifically, SailingStone Capital Partners was the largest shareholder of Range Resources Corp. (NYSE:RRC), with a stake worth $156.2 million reported as of the end of June. Trailing SailingStone Capital Partners was Kopernik Global Investors, which amassed a stake valued at $89.4 million. D E Shaw, Contrarius Investment Management, and Fisher Asset Management 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 SailingStone Capital Partners allocated the biggest weight to Range Resources Corp. (NYSE:RRC), around 30.57% of its 13F portfolio. Kopernik Global Investors is also relatively very bullish on the stock, earmarking 9.37 percent of its 13F equity portfolio to RRC.

Since Range Resources Corp. (NYSE:RRC) has faced declining sentiment from the entirety of the hedge funds we track, it's easy to see that there was a specific group of money managers who were dropping their entire stakes in the second quarter. It's worth mentioning that Viraj Mehta's Arctis Global dropped the biggest investment of all the hedgies watched by Insider Monkey, worth close to $17.3 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also cut its stock, about $10.8 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds in the second quarter.

Let's check out hedge fund activity in other stocks similar to Range Resources Corp. (NYSE:RRC). We will take a look at Safehold Inc. (NYSE:SAFE), Cardlytics, Inc. (NASDAQ:CDLX), HUYA Inc. (NYSE:HUYA), Grand Canyon Education Inc (NASDAQ:LOPE), National Vision Holdings, Inc. (NASDAQ:EYE), Madison Square Garden Sports Corp. (NYSE:MSGS), and Box, Inc. (NYSE:BOX). All of these stocks' market caps are similar to RRC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SAFE,6,7173,-2 CDLX,29,1182760,-9 HUYA,11,89812,-2 LOPE,25,173874,1 EYE,19,356510,-5 MSGS,37,954653,-10 BOX,35,754875,-8 Average,23.1,502808,-5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $503 million. That figure was $494 million in RRC's case. Madison Square Garden Sports Corp. (NYSE:MSGS) is the most popular stock in this table. On the other hand Safehold Inc. (NYSE:SAFE) is the least popular one with only 6 bullish hedge fund positions. Range Resources Corp. (NYSE:RRC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RRC is 50.9. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on RRC as the stock returned 47.1% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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