Here is What Hedge Funds Think About Donnelley Financial Solutions, Inc. (DFIN)

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Donnelley Financial Solutions, Inc. (NYSE:DFIN).

Is Donnelley Financial Solutions, Inc. (NYSE:DFIN) worth your attention right now? Money managers were taking a bullish view. The number of bullish hedge fund bets increased by 4 lately. Donnelley Financial Solutions, Inc. (NYSE:DFIN) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 23. Our calculations also showed that DFIN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 16 hedge funds in our database with DFIN positions at the end of the first quarter.

In today’s marketplace there are tons of gauges stock traders employ to appraise their stock investments. A pair of the most innovative gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can beat the market by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Peter Algert of Algert Global

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the radar stock. We go through lists like the 10 best growth stocks to buy 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a peek at the recent hedge fund action regarding Donnelley Financial Solutions, Inc. (NYSE:DFIN).

Do Hedge Funds Think DFIN Is A Good Stock To Buy Now?

At second quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the first quarter of 2020. On the other hand, there were a total of 23 hedge funds with a bullish position in DFIN a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Among these funds, Simcoe Capital Management held the most valuable stake in Donnelley Financial Solutions, Inc. (NYSE:DFIN), which was worth $108.9 million at the end of the second quarter. On the second spot was D E Shaw which amassed $9.2 million worth of shares. Arrowstreet Capital, Steamboat Capital Partners, and Harbert 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 Simcoe Capital Management allocated the biggest weight to Donnelley Financial Solutions, Inc. (NYSE:DFIN), around 11.96% of its 13F portfolio. Harbert Management is also relatively very bullish on the stock, dishing out 3.13 percent of its 13F equity portfolio to DFIN.

Consequently, specific money managers have jumped into Donnelley Financial Solutions, Inc. (NYSE:DFIN) headfirst. Harbert Management, managed by Raymond J. Harbert, initiated the biggest position in Donnelley Financial Solutions, Inc. (NYSE:DFIN). Harbert Management had $5.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.7 million investment in the stock during the quarter. The other funds with brand new DFIN positions are Ken Griffin’s Citadel Investment Group, Peter Algert’s Algert Global, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s now review hedge fund activity in other stocks similar to Donnelley Financial Solutions, Inc. (NYSE:DFIN). These stocks are Cowen Inc. (NASDAQ:COWN), MagnaChip Semiconductor Corporation (NYSE:MX), Radius Global Infrastructure, Inc. (NASDAQ:RADI), Altus Midstream Company (NASDAQ:ALTM), AMMO, Inc. (NASDAQ:POWW), Endo International plc (NASDAQ:ENDP), and Lydall, Inc. (NYSE:LDL). This group of stocks’ market values are similar to DFIN’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $194 million. That figure was $153 million in DFIN’s case. MagnaChip Semiconductor Corporation (NYSE:MX) is the most popular stock in this table. On the other hand Altus Midstream Company (NASDAQ:ALTM) is the least popular one with only 3 bullish hedge fund positions. Donnelley Financial Solutions, Inc. (NYSE:DFIN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DFIN is 61.6. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on DFIN as the stock returned 11.7% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.