Between June 25 and October 30th, the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Dycom Industries, Inc. (NYSE:DY) and see how the stock is affected by the recent hedge fund activity.
Is Dycom Industries, Inc. (NYSE:DY) a good stock to buy now? Investors who are in the know are getting more bullish. The number of bullish hedge fund positions moved up by 2 in recent months. Dycom Industries, Inc. (NYSE:DY) was in 25 hedge funds’ portfolios at the end of the third quarter of 2015. There were 23 hedge funds in our database with Dycom Industries, Inc. (NYSE:DY) 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 Texas Capital Bancshares Inc (NASDAQ:TCBI), IBERIABANK Corporation (NASDAQ:IBKC), and Huntsman Corporation (NYSE:HUN) to gather more data points.
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Follow Dycom Industries Inc (NYSE:DY)
In today’s marketplace, there are numerous gauges stock market investors have at their disposal to grade their holdings. Two of the less utilized gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the market by a significant amount (see the details here).
Keeping this in mind, we’re going to take a gander at the new action regarding Dycom Industries, Inc. (NYSE:DY).
How are hedge funds trading Dycom Industries, Inc. (NYSE:DY)?
Heading into Q4, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 9% from the second quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, James Dinan’s York Capital Management has the largest position in Dycom Industries, Inc. (NYSE:DY), worth close to $187.4 million, amounting to 2.5% of its total 13F portfolio. The second most bullish fund manager is Peconic Partners LLC, managed by William Harnisch, which holds a $139.8 million position; the fund has 22.8% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Brian Jackelow’s SAB Capital Management, Clifford Fox’s Columbus Circle Investors, and Michael O’Keefe’s 12th Street Asset Management.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. SAB Capital Management initiated the largest position in Dycom Industries, Inc. (NYSE:DY). SAB Capital Management had $71.4 million invested in the company at the end of the quarter. Nick Niell’s Arrowgrass Capital Partners also initiated a $4.5 million position during the quarter. The other funds with brand new DY positions are Christian Leone’s Luxor Capital Group, Robert Henry Lynch’s Aristeia Capital, and Mark Broach’s Manatuck Hill Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Dycom Industries, Inc. (NYSE:DY) but similarly valued. These stocks are Texas Capital Bancshares Inc (NASDAQ:TCBI), IBERIABANK Corporation (NASDAQ:IBKC), Huntsman Corporation (NYSE:HUN), and Nu Skin Enterprises, Inc. (NYSE:NUS). This group of stocks’ market valuations is closest to Dycom Industries, Inc. (NYSE:DY)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCBI | 15 | 219834 | -1 |
| IBKC | 8 | 188712 | -2 |
| HUN | 45 | 465214 | 7 |
| NUS | 29 | 175945 | 6 |
As you can see, these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $262 million. That figure was $579 million in Dycom Industries, Inc. (NYSE:DY)’s case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table. On the other hand, IBERIABANK Corporation (NASDAQ:IBKC) is the least popular one with only 8 bullish hedge fund positions. Dycom Industries, Inc. (NYSE:DY) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Huntsman Corporation (NYSE:HUN) might be a better candidate to consider a long position.
