Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Digitalbridge Group Inc (NYSE:DBRG) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Digitalbridge Group Inc (NYSE:DBRG) a buy here? Money managers were in a bullish mood. The number of bullish hedge fund bets improved by 2 lately. Digitalbridge Group Inc (NYSE:DBRG) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 36. Our calculations also showed that DBRG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s take a glance at the key hedge fund action regarding Digitalbridge Group Inc (NYSE:DBRG).
Seth Klarman of Baupost Group
Do Hedge Funds Think DBRG Is A Good Stock To Buy Now?
At third quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DBRG over the last 25 quarters. With hedge funds’ sentiment swirling, 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, Seth Klarman’s Baupost Group has the biggest position in Digitalbridge Group Inc (NYSE:DBRG), worth close to $137.9 million, comprising 1.3% of its total 13F portfolio. The second most bullish fund manager is Iridian Asset Management, led by David Cohen and Harold Levy, holding a $69.1 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Charles Akre’s Akre Capital Management, Ted White and Christopher Kiper’s Legion Partners Asset Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Legion Partners Asset Management allocated the biggest weight to Digitalbridge Group Inc (NYSE:DBRG), around 12.46% of its 13F portfolio. MIC Capital Partners is also relatively very bullish on the stock, dishing out 2.78 percent of its 13F equity portfolio to DBRG.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in Digitalbridge Group Inc (NYSE:DBRG). Balyasny Asset Management had $8.4 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.7 million position during the quarter. The other funds with brand new DBRG positions are Noam Gottesman’s GLG Partners, Donald Sussman’s Paloma Partners, and Peter Algert’s Algert Global.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Digitalbridge Group Inc (NYSE:DBRG) but similarly valued. We will take a look at Turquoise Hill Resources Ltd (NYSE:TRQ), Helmerich & Payne, Inc. (NYSE:HP), NorthWestern Corporation (NASDAQ:NWE), Hecla Mining Company (NYSE:HL), Badger Meter, Inc. (NYSE:BMI), Integer Holdings Corporation (NYSE:ITGR), and Graham Holdings Co (NYSE:GHC). This group of stocks’ market values match DBRG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRQ | 10 | 562805 | -1 |
| HP | 25 | 140913 | 10 |
| NWE | 14 | 37801 | -1 |
| HL | 15 | 101851 | -5 |
| BMI | 16 | 188536 | -3 |
| ITGR | 22 | 151524 | -1 |
| GHC | 24 | 457538 | 1 |
| Average | 18 | 234424 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $234 million. That figure was $478 million in DBRG’s case. Helmerich & Payne, Inc. (NYSE:HP) is the most popular stock in this table. On the other hand Turquoise Hill Resources Ltd (NYSE:TRQ) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Digitalbridge Group Inc (NYSE:DBRG) is more popular among hedge funds. Our overall hedge fund sentiment score for DBRG is 82.8. 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 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 returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on DBRG as the stock returned 21.1% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
