Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about Darling Ingredients Inc. (NYSE:DAR) in this article.
Darling Ingredients Inc. (NYSE:DAR) was in 28 hedge funds’ portfolios at the end of September. DAR shareholders have witnessed a decrease in hedge fund interest in recent months. There were 33 hedge funds in our database with DAR holdings 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 RSP Permian Inc (NYSE:RSPP), West Corp (NASDAQ:WSTC), and OM Asset Management PLC (NYSE:OMAM) to gather more data points.
Follow Darling Ingredients Inc. (NYSE:DAR)
Follow Darling Ingredients Inc. (NYSE:DAR)
If you’d ask most stock holders, hedge funds are viewed as slow, old financial vehicles of years past. While there are more than 8000 funds trading at the moment, We hone in on the bigwigs of this club, approximately 700 funds. These investment experts manage most of all hedge funds’ total capital, and by keeping track of their matchless investments, Insider Monkey has identified numerous investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, we’re going to take a look at the latest action surrounding Darling Ingredients Inc. (NYSE:DAR).
How have hedgies been trading Darling Ingredients Inc. (NYSE:DAR)?
Heading into Q4, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the second quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Gates Capital Management, managed by Jeffrey Gates, holds the number one position in Darling Ingredients Inc. (NYSE:DAR). Gates Capital Management has an $197 million position in the stock, comprising 7.6% of its 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds an $90.9 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism encompass Lee Munder’s Lee Munder Capital Group, Ken Fisher’s Fisher Asset Management and Steve Cohen’s Point72 Asset Management.
Judging by the fact that Darling Ingredients Inc. (NYSE:DAR) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedge funds that elected to cut their full holdings in the third quarter. Intriguingly, Matt Sirovich and Jeremy Mindich’s Scopia Capital cut the largest investment of all the hedgies watched by Insider Monkey, worth about $24.2 million in stock. Ken Grossman and Glen Schneider’s fund, SG Capital Management, also dropped its stock, about $10 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Darling Ingredients Inc. (NYSE:DAR). These stocks are RSP Permian Inc (NYSE:RSPP), West Corp (NASDAQ:WSTC), OM Asset Management PLC (NYSE:OMAM), and South State Corporation (NASDAQ:SSB). This group of stocks’ market valuations resemble DAR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RSPP | 20 | 208298 | 1 |
| WSTC | 16 | 73353 | -7 |
| OMAM | 13 | 99404 | -1 |
| SSB | 12 | 78091 | 3 |
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $430 million in DAR’s case. RSP Permian Inc (NYSE:RSPP) is the most popular stock in this table. On the other hand South State Corporation (NASDAQ:SSB) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Darling Ingredients Inc. (NYSE:DAR) is more popular among hedge funds. 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.
