There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze DMC Global Inc. (NASDAQ:BOOM).
DMC Global Inc. (NASDAQ:BOOM) shareholders have witnessed an increase in hedge fund interest recently. Our calculations also showed that BOOM isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the key hedge fund action encompassing DMC Global Inc. (NASDAQ:BOOM).
What does smart money think about DMC Global Inc. (NASDAQ:BOOM)?
Heading into the third quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 43% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in BOOM a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies holds the largest position in DMC Global Inc. (NASDAQ:BOOM). Renaissance Technologies has a $37.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Balyasny Asset Management, led by Dmitry Balyasny, holding a $15.6 million position; 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism consist of Mark Broach’s Manatuck Hill Partners, Josh Goldberg’s G2 Investment Partners Management and Richard Driehaus’s Driehaus Capital.
Consequently, specific money managers have jumped into DMC Global Inc. (NASDAQ:BOOM) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most outsized position in DMC Global Inc. (NASDAQ:BOOM). Balyasny Asset Management had $15.6 million invested in the company at the end of the quarter. Josh Goldberg’s G2 Investment Partners Management also initiated a $6.4 million position during the quarter. The following funds were also among the new BOOM investors: Israel Englander’s Millennium Management, Matthew Hulsizer’s PEAK6 Capital Management, and Louis Navellier’s Navellier & Associates.
Let’s go over hedge fund activity in other stocks similar to DMC Global Inc. (NASDAQ:BOOM). We will take a look at Gannett Co., Inc. (NYSE:GCI), Luminex Corporation (NASDAQ:LMNX), Atara Biotherapeutics Inc (NASDAQ:ATRA), and OneSpaWorld Holdings Limited (NASDAQ:OSW). This group of stocks’ market valuations resemble BOOM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GCI | 14 | 121005 | -2 |
| LMNX | 17 | 147610 | -4 |
| ATRA | 12 | 377753 | -3 |
| OSW | 11 | 86464 | 0 |
| Average | 13.5 | 183208 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $104 million in BOOM’s case. Luminex Corporation (NASDAQ:LMNX) is the most popular stock in this table. On the other hand OneSpaWorld Holdings Limited (NASDAQ:OSW) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks DMC Global Inc. (NASDAQ:BOOM) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BOOM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BOOM were disappointed as the stock returned -30.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
