Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Dorchester Minerals LP (NASDAQ:DMLP)? The smart money sentiment can provide an answer to this question.
Dorchester Minerals LP (NASDAQ:DMLP) has seen an increase in activity from the world’s largest hedge funds in recent months. DMLP was in 7 hedge funds’ portfolios at the end of June. There were 6 hedge funds in our database with DMLP positions at the end of the previous quarter. Our calculations also showed that DMLP isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a large number of gauges stock market investors have at their disposal to assess publicly traded companies. A couple of the most innovative gauges are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best money managers can beat the S&P 500 by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a glance at the new hedge fund action regarding Dorchester Minerals LP (NASDAQ:DMLP).
Hedge fund activity in Dorchester Minerals LP (NASDAQ:DMLP)
At the end of the second quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DMLP over the last 16 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Horizon Asset Management was the largest shareholder of Dorchester Minerals LP (NASDAQ:DMLP), with a stake worth $14 million reported as of the end of March. Trailing Horizon Asset Management was Royce & Associates, which amassed a stake valued at $12.7 million. SCW Capital Management, Wexford Capital, and Arrowstreet Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, specific money managers were breaking ground themselves. Horizon Asset Management, managed by Murray Stahl, created the largest position in Dorchester Minerals LP (NASDAQ:DMLP). Horizon Asset Management had $14 million invested in the company at the end of the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Dorchester Minerals LP (NASDAQ:DMLP) but similarly valued. These stocks are Tristate Capital Holdings Inc (NASDAQ:TSC), Stemline Therapeutics Inc (NASDAQ:STML), TherapeuticsMD Inc (NASDAQ:TXMD), and FTS International, Inc. (NYSE:FTSI). This group of stocks’ market caps are closest to DMLP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSC | 10 | 47224 | -3 |
| STML | 17 | 226395 | -3 |
| TXMD | 8 | 21158 | -1 |
| FTSI | 18 | 27543 | -3 |
| Average | 13.25 | 80580 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $40 million in DMLP’s case. FTS International, Inc. (NYSE:FTSI) is the most popular stock in this table. On the other hand TherapeuticsMD Inc (NASDAQ:TXMD) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Dorchester Minerals LP (NASDAQ:DMLP) is even less popular than TXMD. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on DMLP, though not to the same extent, as the stock returned 4.6% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
