Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Donnelley Financial Solutions, Inc. (NYSE:DFIN).
Donnelley Financial Solutions, Inc. (NYSE:DFIN) has seen an increase in hedge fund sentiment in recent months. Donnelley Financial Solutions, Inc. (NYSE:DFIN) was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 23. There were 20 hedge funds in our database with DFIN positions at the end of the second quarter. Our calculations also showed that DFIN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Donald Sussman of Paloma Partners
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. With all of this in mind let’s view the latest hedge fund action surrounding Donnelley Financial Solutions, Inc. (NYSE:DFIN).
Do Hedge Funds Think DFIN Is A Good Stock To Buy Now?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in DFIN a year ago. 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 Donnelley Financial Solutions, Inc. (NYSE:DFIN) was held by Simcoe Capital Management, which reported holding $114.2 million worth of stock at the end of September. It was followed by Steamboat Capital Partners with a $14 million position. Other investors bullish on the company included D E Shaw, Harbert Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Simcoe Capital Management allocated the biggest weight to Donnelley Financial Solutions, Inc. (NYSE:DFIN), around 11.29% of its 13F portfolio. Steamboat Capital Partners is also relatively very bullish on the stock, earmarking 3.25 percent of its 13F equity portfolio to DFIN.
Consequently, key money managers have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, assembled the biggest position in Donnelley Financial Solutions, Inc. (NYSE:DFIN). ExodusPoint Capital had $0.4 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Donnelley Financial Solutions, Inc. (NYSE:DFIN) but similarly valued. These stocks are Innoviva, Inc. (NASDAQ:INVA), S & T Bancorp Inc (NASDAQ:STBA), Krystal Biotech, Inc. (NASDAQ:KRYS), Five Point Holdings, LLC (NYSE:FPH), Velodyne Lidar, Inc. (NASDAQ:VLDR), Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX), and SFL Corporation Ltd. (NYSE:SFL). All of these stocks’ market caps are similar to DFIN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INVA | 18 | 292175 | 4 |
| STBA | 7 | 4798 | 4 |
| KRYS | 13 | 222807 | 4 |
| FPH | 8 | 242437 | -3 |
| VLDR | 13 | 12818 | -5 |
| FMTX | 16 | 508351 | 3 |
| SFL | 13 | 57476 | -5 |
| Average | 12.6 | 191552 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $192 million. That figure was $169 million in DFIN’s case. Innoviva, Inc. (NASDAQ:INVA) is the most popular stock in this table. On the other hand S & T Bancorp Inc (NASDAQ:STBA) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Donnelley Financial Solutions, Inc. (NYSE:DFIN) is more popular among hedge funds. Our overall hedge fund sentiment score for DFIN is 83.4. 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 3.6 percentage points. Hedge funds were also right about betting on DFIN as the stock returned 36.2% since the end of September (through 12/31) 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.
