Based on the fact that hedge funds have collectively underperformed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is Diana Containerships Inc (NASDAQ:DCIX) going to take off soon? The best stock pickers are becoming less hopeful. The number of bullish hedge fund bets were cut by 3 lately. DCIX was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. There were 7 hedge funds in our database with DCIX holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Comstock Resources Inc (NYSE:CRK), PRGX Global Inc (NASDAQ:PRGX), and Camtek LTD. (NASDAQ:CAMT) to gather more data points.
In the eyes of most shareholders, hedge funds are assumed to be worthless, outdated financial tools of the past. While there are more than 8000 funds in operation today, Our researchers choose to focus on the aristocrats of this group, around 700 funds. It is estimated that this group of investors control the majority of the smart money’s total capital, and by keeping an eye on their highest performing equity investments, Insider Monkey has found many investment strategies that have historically beaten the market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, let’s take a gander at the key action regarding Diana Containerships Inc (NASDAQ:DCIX).
How are hedge funds trading Diana Containerships Inc (NASDAQ:DCIX)?
Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -43% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, 12 West Capital Management, managed by Joel Ramin, holds the most valuable position in Diana Containerships Inc (NASDAQ:DCIX). 12 West Capital Management has a $24.2 million position in the stock, comprising 3.5% of its 13F portfolio. On 12 West Capital Management’s heels is Jim Simons of Renaissance Technologies, with a $0.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions comprise Richard Mashaal’s Rima Senvest Management, and Ken Griffin’s Citadel Investment Group.
Because Diana Containerships Inc (NASDAQ:DCIX) has experienced falling interest from the entirety of the hedge funds we track, we can see that there were a few hedgies that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Israel Englander’s Millennium Management dropped the biggest stake of all the hedgies tracked by Insider Monkey, totaling about $0.1 million in stock. Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s fund, GRT Capital Partners, also dropped its stock, about $0.1 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Diana Containerships Inc (NASDAQ:DCIX) but similarly valued. We will take a look at Comstock Resources Inc (NYSE:CRK), PRGX Global Inc (NASDAQ:PRGX), Camtek LTD. (NASDAQ:CAMT), and Frequency Electronics, Inc. (NASDAQ:FEIM). This group of stocks’ market values match DCIX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRK | 7 | 3793 | -2 |
| PRGX | 13 | 22555 | -1 |
| CAMT | 4 | 4522 | 1 |
| FEIM | 5 | 5854 | -1 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $26 million in DCIX’s case. PRGX Global Inc (NASDAQ:PRGX) is the most popular stock in this table, while the least popular one is hand Camtek LTD. (NASDAQ:CAMT). With 4 bullish hedge fund points, Diana Containerships Inc (NASDAQ:DCIX) has the same popularity as the least popular stock in this table – CAMT. This indicates that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article. To comprehend why the smart money isn’t behind this stock, more detailed analysis is needed. This doesn’t necessarily mean that this stock isn’t worth considering, as it is possible that investors thought of it as overvalued because they weren’t considering the bullish thesis. In any case, further research is advisable.
