The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Diamond Resorts International Inc (NYSE:DRII).
Diamond Resorts International Inc has seen an increase in support from the world’s most elite money managers recently. DRII was in 32 hedge funds’ portfolios at the end of the third quarter of 2015. There were 27 hedge funds in our database with DRII positions 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 Marcus & Millichap Inc (NYSE:MMI), Enbridge Energy Management, L.L.C. (NYSE:EEQ), and Rexnord Corp (NYSE:RXN) to gather more data points.
Follow Diamond Resorts International Inc. (NYSE:DRII)
Follow Diamond Resorts International Inc. (NYSE:DRII)
Today there are many methods market participants put to use to evaluate publicly traded companies. Some of the most under-the-radar methods are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top money managers can trounce the market by a superb amount (see the details here).
With all of this in mind, we’re going to review the recent action regarding Diamond Resorts International Inc (NYSE:DRII).
What have hedge funds been doing with Diamond Resorts International Inc (NYSE:DRII)?
Heading into Q4, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 19% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Pentwater Capital Management, managed by Matthew Halbower, holds the biggest position in Diamond Resorts International Inc (NYSE:DRII). The fund has a $62.7 million position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $41.9 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism include Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Stephen Loukas, David A. Lorber, Zachary George’s FrontFour Capital Group and Curtis Schenker and Craig Effron’s Scoggin.
As one would reasonably expect, some big names were breaking ground themselves. Scoggin, managed by Curtis Schenker and Craig Effron, assembled the most valuable position in Diamond Resorts International Inc (NYSE:DRII). The fund had $22.9 million invested in the company at the end of the quarter. Vishal Bhutani and Joshua Bederman’s Pyrrho Capital Management also made a $7.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Rod Hinze’s KeyPoint Capital Management and Glenn Russell Dubin’s Highbridge Capital Management.
Let’s go over hedge fund activity in other stocks similar to Diamond Resorts International Inc (NYSE:DRII). We will take a look at Marcus & Millichap Inc (NYSE:MMI), Enbridge Energy Management, L.L.C. (NYSE:EEQ), Rexnord Corp (NYSE:RXN), and Ligand Pharmaceuticals Inc. (NASDAQ:LGND). This group of stocks’ market caps are closest to DRII’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MMI | 14 | 69692 | -4 |
| EEQ | 7 | 27263 | -3 |
| RXN | 17 | 166220 | 1 |
| LGND | 16 | 210066 | -3 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $289 million in DRII’s case. Rexnord Corp (NYSE:RXN) is the most popular stock in this table. On the other hand Enbridge Energy Management, L.L.C. (NYSE:EEQ) is the least popular one with only 7 bullish hedge fund positions. Diamond Resorts International Inc (NYSE:DRII) outshines them all, having attracted the attention and the money of 32 elite investors. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
