Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Dover Corporation (NYSE:DOV) in this article.
Is Dover Corporation (NYSE:DOV) undervalued? Prominent investors were turning bullish. The number of long hedge fund bets moved up by 3 recently. Dover Corporation (NYSE:DOV) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 40. Our calculations also showed that DOV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 29 hedge funds in our database with DOV positions at the end of the second quarter.
Michael Gelband of ExodusPoint Capital
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 review the latest hedge fund action encompassing Dover Corporation (NYSE:DOV).
Do Hedge Funds Think DOV Is A Good Stock To Buy Now?
At third quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the second quarter of 2021. On the other hand, there were a total of 40 hedge funds with a bullish position in DOV a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Dover Corporation (NYSE:DOV), with a stake worth $81.9 million reported as of the end of September. Trailing AQR Capital Management was Adage Capital Management, which amassed a stake valued at $38.7 million. Millennium Management, Arrowstreet Capital, and Scopus Asset Management 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 Sciencast Management allocated the biggest weight to Dover Corporation (NYSE:DOV), around 0.7% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, dishing out 0.56 percent of its 13F equity portfolio to DOV.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. ExodusPoint Capital, managed by Michael Gelband, initiated the most valuable position in Dover Corporation (NYSE:DOV). ExodusPoint Capital had $21.8 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $2.7 million position during the quarter. The other funds with new positions in the stock are Qing Li’s Sciencast Management, Paul Tudor Jones’s Tudor Investment Corp, and Greg Eisner’s Engineers Gate Manager.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Dover Corporation (NYSE:DOV) but similarly valued. We will take a look at Zillow Group Inc (NASDAQ:Z), Monolithic Power Systems, Inc. (NASDAQ:MPWR), Xylem Inc (NYSE:XYL), Hormel Foods Corporation (NYSE:HRL), Imperial Oil Limited (NYSE:IMO), Bio-Rad Laboratories, Inc. (NYSE:BIO), and Qualtrics International Inc. (NASDAQ:XM). This group of stocks’ market caps are similar to DOV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| Z | 67 | 4251493 | -9 |
| MPWR | 28 | 799034 | -6 |
| XYL | 22 | 821321 | -1 |
| HRL | 29 | 476824 | 5 |
| IMO | 10 | 99009 | -5 |
| BIO | 38 | 1442180 | -3 |
| XM | 26 | 1694438 | -11 |
| Average | 31.4 | 1369186 | -4.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $1369 million. That figure was $351 million in DOV’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Imperial Oil Limited (NYSE:IMO) is the least popular one with only 10 bullish hedge fund positions. Dover Corporation (NYSE:DOV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DOV is 51.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately DOV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DOV were disappointed as the stock returned 5.7% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
