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 Carl Icahn and George Soros 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 Deutsche Bank AG (USA) (NYSE:DB).
Is Deutsche Bank AG (USA) (NYSE:DB) the right investment to pursue these days? The best stock pickers are betting on the stock. The number of long hedge fund positions inched up by 7 recently. 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 Nielsen Hldg NV (NYSE:NLSN), Level 3 Communications, Inc. (NYSE:LVLT), and Moody’s Corporation (NYSE:MCO) to gather more data points.
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Follow Deutsche Bank Ag (NYSE:DB)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How have hedgies been trading Deutsche Bank AG (USA) (NYSE:DB)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 47% surge from one quarter earlier, as hedge funds continue to pile into the stock. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Masters Capital Management, managed by Mike Masters, holds the largest position in Deutsche Bank AG (USA) (NYSE:DB). Masters Capital Management has a $39.3 million call position in the stock. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $21.5 million call position. Other peers that hold long positions contain Jim Simons’ Renaissance Technologies, Himanshu H. Shah’s Shah Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Now, key hedge funds were leading the bulls’ herd. Citadel Investment Group assembled the largest call position in Deutsche Bank AG (USA) (NYSE:DB). Noam Gottesman’s GLG Partners also made a $3.9 million investment in the stock during the quarter. The other funds with brand new DB positions are Simon Sadler’s Segantii Capital, Dmitry Balyasny’s Balyasny Asset Management, and Bart Baum’s Ionic Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Deutsche Bank AG (USA) (NYSE:DB) but similarly valued. We will take a look at Nielsen Hldg NV (NYSE:NLSN), Level 3 Communications, Inc. (NYSE:LVLT), Moody’s Corporation (NYSE:MCO), and PACCAR Inc (NASDAQ:PCAR). This group of stocks’ market caps match DB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NLSN | 26 | 436451 | -3 |
| LVLT | 49 | 2788737 | 1 |
| MCO | 34 | 4009791 | 0 |
| PCAR | 26 | 370727 | 0 |
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1.90 billion. That figure was $112 million in DB’s case. Level 3 Communications, Inc. (NYSE:LVLT) is the most popular stock in this table. On the other hand Nielsen Hldg NV (NYSE:NLSN) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Deutsche Bank AG (USA) (NYSE:DB) is even less popular than NLSN. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news though, as hedge funds tend to be underweight ADR/USA stocks, and given that ownership is rising fast.
Disclosure: None
