The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at DXP Enterprises Inc (NASDAQ:DXPE) from the perspective of those elite funds.
Is DXP Enterprises Inc (NASDAQ:DXPE) going to take off soon? Money managers are in a bullish mood. The number of bullish hedge fund bets increased by 4 recently. Our calculations also showed that dxpe isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most market participants, hedge funds are perceived as unimportant, old investment tools of yesteryear. While there are more than 8000 funds with their doors open today, Our experts hone in on the masters of this club, about 750 funds. It is estimated that this group of investors manage bulk of the smart money’s total asset base, and by tailing their inimitable picks, Insider Monkey has formulated several investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per annum since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let’s take a peek at the latest hedge fund action regarding DXP Enterprises Inc (NASDAQ:DXPE).
What does smart money think about DXP Enterprises Inc (NASDAQ:DXPE)?
At Q1’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in DXPE 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.
Among these funds, Nantahala Capital Management held the most valuable stake in DXP Enterprises Inc (NASDAQ:DXPE), which was worth $49.2 million at the end of the first quarter. On the second spot was Millennium Management which amassed $5.8 million worth of shares. Moreover, Renaissance Technologies, Citadel Investment Group, and AlphaOne Capital Partners were also bullish on DXP Enterprises Inc (NASDAQ:DXPE), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in DXP Enterprises Inc (NASDAQ:DXPE). Marshall Wace LLP had $1.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Mike Vranos’s Ellington, Joel Greenblatt’s Gotham Asset Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as DXP Enterprises Inc (NASDAQ:DXPE) but similarly valued. These stocks are Re/Max Holdings Inc (NYSE:RMAX), Virtus Investment Partners Inc (NASDAQ:VRTS), Nine Energy Service, Inc. (NYSE:NINE), and United Insurance Holdings Corp.(NASDAQ:UIHC). All of these stocks’ market caps resemble DXPE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RMAX | 6 | 53016 | 1 |
| VRTS | 15 | 91759 | 4 |
| NINE | 10 | 42516 | 0 |
| UIHC | 7 | 8100 | 1 |
| Average | 9.5 | 48848 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $69 million in DXPE’s case. Virtus Investment Partners Inc (NASDAQ:VRTS) is the most popular stock in this table. On the other hand Re/Max Holdings Inc (NYSE:RMAX) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks DXP Enterprises Inc (NASDAQ:DXPE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately DXPE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DXPE were disappointed as the stock returned -10.1% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
