Is DHI Group Inc. (NYSE:DHX) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
DHI Group Inc. (NYSE:DHX) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. DHX was in 17 hedge funds’ portfolios at the end of the third quarter of 2019. There were 16 hedge funds in our database with DHX positions at the end of the previous quarter. Our calculations also showed that DHX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the fresh hedge fund action encompassing DHI Group Inc. (NYSE:DHX).
How are hedge funds trading DHI Group Inc. (NYSE:DHX)?
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in DHX a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, holds the largest position in DHI Group Inc. (NYSE:DHX). Nantahala Capital Management has a $19.2 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Archon Capital Management, managed by Constantinos J. Christofilis, which holds a $14.6 million position; the fund has 3.4% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include Renaissance Technologies, David E. Shaw’s D E Shaw and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Archon Capital Management allocated the biggest weight to DHI Group Inc. (NYSE:DHX), around 3.44% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, earmarking 0.71 percent of its 13F equity portfolio to DHX.
Consequently, specific money managers have jumped into DHI Group Inc. (NYSE:DHX) headfirst. AQR Capital Management, managed by Cliff Asness, established the most valuable position in DHI Group Inc. (NYSE:DHX). AQR Capital Management had $0.2 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $0.1 million position during the quarter. The following funds were also among the new DHX investors: David Harding’s Winton Capital Management and Andre F. Perold’s HighVista Strategies.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as DHI Group Inc. (NYSE:DHX) but similarly valued. We will take a look at Maui Land & Pineapple Company, Inc. (NYSE:MLP), Geospace Technologies Corp (NASDAQ:GEOS), Eros International plc (NYSE:EROS), and Atento SA (NYSE:ATTO). This group of stocks’ market values are similar to DHX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MLP | 2 | 6750 | 0 |
| GEOS | 6 | 10404 | 0 |
| EROS | 6 | 12518 | -2 |
| ATTO | 7 | 1952 | -2 |
| Average | 5.25 | 7906 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $58 million in DHX’s case. Atento SA (NYSE:ATTO) is the most popular stock in this table. On the other hand Maui Land & Pineapple Company, Inc. (NYSE:MLP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks DHI Group Inc. (NYSE:DHX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately DHX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DHX were disappointed as the stock returned -12.5% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
