At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
In this article, let’s take a closer look at the hedge fund sentiment towards Delek US Holdings, Inc. (NYSE:DK). During the third quarter, the stock registered a decrease in popularity, as the number of funds from the Insider Monkey database bullish on Delek US Holdings fell by three. At the end of this article we will also compare DK to other stocks including Primoris Services Corp (NASDAQ:PRIM), Mpg Office Trust Inc (NYSE:MPG), and Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) to get a better sense of its popularity.
Follow Delek Us Holdings Inc. (NYSE:DK)
Follow Delek Us Holdings Inc. (NYSE:DK)
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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Keeping this in mind, we’re going to take a peek at the key action regarding Delek US Holdings, Inc. (NYSE:DK).
Hedge fund activity in Delek US Holdings, Inc. (NYSE:DK)
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, which represents a decline of 17% from the end of the second quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in DK at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Steve Cohen’s Point72 Asset Management has the biggest position in Delek US Holdings, Inc. (NYSE:DK), worth close to $73.1 million, accounting for 0.5% of its total 13F portfolio. The second most bullish fund is Millennium Management, one of the world’s biggest, holding a $64.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism include D. E. Shaw’s D E Shaw, Robert Polak’s Anchor Bolt Capital, and Jonathan Barrett and Paul Segal’s Luminus Management. We should note that Luminus Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because Delek US Holdings, Inc. (NYSE:DK) has gone through declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of money managers that decided to sell off their positions entirely heading into Q4. It’s worth mentioning that Jeffrey Smith’s Starboard Value LP cut the biggest stake of all the hedgies studied by Insider Monkey, comprising an estimated $24.4 million in stock. Min Htoo and Jordan Teramo’s fund, Anandar Capital Management, also sold off its call options, about $19.8 million worth.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Delek US Holdings, Inc. (NYSE:DK) but similarly valued. We will take a look at Primoris Services Corp (NASDAQ:PRIM), Mpg Office Trust Inc (NYSE:MPG), Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), and MBIA Inc. (NYSE:MBI). This group of stocks’ market valuations are similar to DK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRIM | 8 | 26579 | 0 |
| MPG | 12 | 78987 | 4 |
| AAWW | 11 | 98467 | -4 |
| MBI | 20 | 214365 | 1 |
As you can see these stocks had an average of 13 funds with bullish positions and the average amount invested in these stocks was $105 million, which is lower than the $230 million figure in DK’s case. MBIA Inc. (NYSE:MBI) is the most popular stock in this table. On the other hand Primoris Services Corp (NASDAQ:PRIM) is the least popular one with only eight funds having reported long positions. Delek US Holdings, Inc. (NYSE:DK) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MBIA Inc. (NYSE:MBI) might be a better candidate to consider taking a long position in.
Disclosure: none
