Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 26% in 2019 (through November 22nd). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of nearly 35% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like DHT Holdings Inc (NYSE:DHT).
DHT Holdings Inc (NYSE:DHT) was in 23 hedge funds’ portfolios at the end of the third quarter of 2019. DHT investors should pay attention to an increase in enthusiasm from smart money recently. There were 16 hedge funds in our database with DHT holdings at the end of the previous quarter. Our calculations also showed that DHT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are seen as unimportant, old investment tools of yesteryear. While there are over 8000 funds with their doors open today, We hone in on the leaders of this club, around 750 funds. Most estimates calculate that this group of people handle the lion’s share of all hedge funds’ total capital, and by monitoring their first-class equity investments, Insider Monkey has discovered various investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Joshua Friedman of Canyon Capital Advisors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the new hedge fund action regarding DHT Holdings Inc (NYSE:DHT).
How have hedgies been trading DHT Holdings Inc (NYSE:DHT)?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DHT over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of DHT Holdings Inc (NYSE:DHT), with a stake worth $46.6 million reported as of the end of September. Trailing Renaissance Technologies was Lansdowne Partners, which amassed a stake valued at $20.1 million. Canyon Capital Advisors, Arrowstreet Capital, and Firefly Value Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position SAYA Management allocated the biggest weight to DHT Holdings Inc (NYSE:DHT), around 2.36% of its 13F portfolio. Firefly Value Partners is also relatively very bullish on the stock, designating 1.25 percent of its 13F equity portfolio to DHT.
Now, key money managers have jumped into DHT Holdings Inc (NYSE:DHT) headfirst. Point72 Asset Management, managed by Steve Cohen, initiated the most valuable position in DHT Holdings Inc (NYSE:DHT). Point72 Asset Management had $3.3 million invested in the company at the end of the quarter. Charles Davidson and Joseph Jacobs’s Wexford Capital also initiated a $3.1 million position during the quarter. The other funds with brand new DHT positions are Donald Sussman’s Paloma Partners, Noam Gottesman’s GLG Partners, and Bruce Kovner’s Caxton Associates.
Let’s check out hedge fund activity in other stocks similar to DHT Holdings Inc (NYSE:DHT). These stocks are Federal Agricultural Mortgage Corp. (NYSE:AGM), Solar Capital Ltd. (NASDAQ:SLRC), e.l.f. Beauty, Inc. (NYSE:ELF), and NV5 Global, Inc. (NASDAQ:NVEE). This group of stocks’ market valuations are closest to DHT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGM | 10 | 32857 | 3 |
| SLRC | 13 | 52104 | 1 |
| ELF | 20 | 238245 | 2 |
| NVEE | 14 | 23017 | 2 |
| Average | 14.25 | 86556 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $128 million in DHT’s case. e.l.f. Beauty, Inc. (NYSE:ELF) is the most popular stock in this table. On the other hand Federal Agricultural Mortgage Corp. (NYSE:AGM) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks DHT Holdings Inc (NYSE:DHT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on DHT as the stock returned 20.1% during the first two months of Q4 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.
Disclosure: None. This article was originally published at Insider Monkey.
