Is Denbury Inc. (DEN) A Good Stock To Buy?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Denbury Inc. (NYSE:DEN).

Is DEN a good stock to buy? Denbury Inc. (NYSE:DEN) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 29 hedge funds’ portfolios at the end of September. Our calculations also showed that DEN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare DEN to other stocks including PagerDuty, Inc. (NYSE:PD), Allegiant Travel Company (NASDAQ:ALGT), and Methanex Corporation (NASDAQ:MEOH) to get a better sense of its popularity.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind we’re going to take a peek at the fresh hedge fund action regarding Denbury Inc. (NYSE:DEN).

George Soros of Soros Fund Management

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

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in DEN over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Silver Point Capital, managed by Edward A. Mule, holds the largest position in Denbury Inc. (NYSE:DEN). Silver Point Capital has a $257.9 million position in the stock, comprising 12.3% of its 13F portfolio. The second largest stake is held by Courtney Carson of Hein Park Capital, with a $136.3 million position; the fund has 19.8% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of Stephen C. Freidheim’s Cyrus Capital Partners, Rob Citrone’s Discovery Capital Management and Michael A. Price and Amos Meron’s Empyrean Capital Partners. In terms of the portfolio weights assigned to each position Cyrus Capital Partners allocated the biggest weight to Denbury Inc. (NYSE:DEN), around 35.63% of its 13F portfolio. Hein Park Capital is also relatively very bullish on the stock, earmarking 19.8 percent of its 13F equity portfolio to DEN.

Seeing as Denbury Inc. (NYSE:DEN) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of fund managers that elected to cut their entire stakes in the third quarter. It’s worth mentioning that Steven Tananbaum’s GoldenTree Asset Management dumped the largest position of all the hedgies followed by Insider Monkey, worth an estimated $32.4 million in stock. Jos Shaver’s fund, Electron Capital Partners, also sold off its stock, about $20.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Denbury Inc. (NYSE:DEN). We will take a look at PagerDuty, Inc. (NYSE:PD), Allegiant Travel Company (NASDAQ:ALGT), Methanex Corporation (NASDAQ:MEOH), Matson Inc. (NYSE:MATX), Triton International Limited (NYSE:TRTN), Chimera Investment Corporation (NYSE:CIM), and Aerojet Rocketdyne Holdings Inc (NYSE:AJRD). This group of stocks’ market values match DEN’s market value.

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As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $347 million. That figure was $856 million in DEN’s case. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is the most popular stock in this table. On the other hand Matson Inc. (NYSE:MATX) is the least popular one with only 13 bullish hedge fund positions. Denbury Inc. (NYSE:DEN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DEN is 74. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on DEN as the stock returned 13.3% since the end of Q3 (through 11/30) 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.