In this article we will check out the progression of hedge fund sentiment towards Delta Apparel, Inc. (NYSE:DLA) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is DLA a good stock to buy? The smart money was taking a bearish view. The number of bullish hedge fund positions shrunk by 2 lately. Delta Apparel, Inc. (NYSE:DLA) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 8. Our calculations also showed that DLA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 8 hedge funds in our database with DLA positions at the end of the fourth quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Fred DiSanto of Ancora Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks 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. Keeping this in mind we’re going to analyze the fresh hedge fund action surrounding Delta Apparel, Inc. (NYSE:DLA).
Do Hedge Funds Think DLA Is A Good Stock To Buy Now?
At first quarter’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DLA over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Deep Field Asset Management held the most valuable stake in Delta Apparel, Inc. (NYSE:DLA), which was worth $9.1 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $1.9 million worth of shares. Ancora Advisors, Arrowstreet Capital, and Millennium 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 Deep Field Asset Management allocated the biggest weight to Delta Apparel, Inc. (NYSE:DLA), around 4.57% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to DLA.
Due to the fact that Delta Apparel, Inc. (NYSE:DLA) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers that slashed their entire stakes heading into Q2. It’s worth mentioning that Nick Thakore’s Diametric Capital dumped the biggest investment of the 750 funds tracked by Insider Monkey, worth about $0.5 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Prelude Capital (previously Springbok Capital), also sold off its stock, about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds heading into Q2.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Delta Apparel, Inc. (NYSE:DLA) but similarly valued. These stocks are ContraFect Corp (NASDAQ:CFRX), PDL Community Bancorp (NASDAQ:PDLB), Culp, Inc. (NYSE:CULP), Aquestive Therapeutics, Inc. (NASDAQ:AQST), CPS Technologies Corp. (NASDAQ:CPSH), Ur-Energy Inc. (NYSE:URG), and ObsEva SA (NASDAQ:OBSV). All of these stocks’ market caps match DLA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CFRX | 18 | 34403 | 8 |
| PDLB | 2 | 2497 | 0 |
| CULP | 9 | 35121 | -3 |
| AQST | 5 | 3048 | -4 |
| CPSH | 4 | 4960 | 4 |
| URG | 4 | 6017 | 0 |
| OBSV | 3 | 1554 | -1 |
| Average | 6.4 | 12514 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $13 million in DLA’s case. ContraFect Corp (NASDAQ:CFRX) is the most popular stock in this table. On the other hand PDL Community Bancorp (NASDAQ:PDLB) is the least popular one with only 2 bullish hedge fund positions. Delta Apparel, Inc. (NYSE:DLA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DLA is 38. 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 19.3% in 2021 through June 25th and beat the market by 4.8 percentage points. A small number of hedge funds were also right about betting on DLA, though not to the same extent, as the stock returned 7.8% since the end of Q1 (through June 25th) and outperformed the market.
Follow Delta Apparel Inc (NYSE:DLA)
Follow Delta Apparel Inc (NYSE:DLA)
Suggested Articles:
- How to Best Use Insider Monkey To Increase Your Returns
- 10 Small-Cap AI Stocks
- 20 Best Countries To Live Considering Climate Change
Disclosure: None. This article was originally published at Insider Monkey.
