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.
Diplomat Pharmacy Inc (NYSE:DPLO) was in 12 hedge funds’ portfolios at the end of September. DPLO has seen an increase in hedge fund interest in recent months. There were 9 hedge funds in our database with DPLO 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 Synchronoss Technologies, Inc. (NASDAQ:SNCR), The Dolan Company (NYSE:DM), and Haemonetics Corporation (NYSE:HAE) to gather more data points.
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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With all of this in mind, we’re going to take a gander at the latest action surrounding Diplomat Pharmacy Inc (NYSE:DPLO).
How are hedge funds trading Diplomat Pharmacy Inc (NYSE:DPLO)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a boost of 33% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in DPLO over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management holds the most valuable position in Diplomat Pharmacy Inc (NYSE:DPLO). According to regulatory filings, the fund has an $11.2 million position in the stock. Coming in second is Ken Griffin of Citadel Investment Group, with a $3 million position. Other members of the smart money that hold long positions encompass Matthew A. Weatherbie’s Weatherbie Capital, Israel Englander’s Millennium Management which is one of the 10 largest hedge funds in the world and George Hall’s Clinton Group. We should note that none of these hedge funds are 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.
Consequently, some big names were breaking ground themselves. Citadel Investment Group initiated the most valuable position in Diplomat Pharmacy Inc (NYSE:DPLO). Millennium Management also initiated a $0.8 million position during the quarter. The other funds with new positions in the stock are Clinton Group, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s now review hedge fund activity in other stocks similar to Diplomat Pharmacy Inc (NYSE:DPLO). These stocks are Synchronoss Technologies, Inc. (NASDAQ:SNCR), The Dolan Company (NYSE:DM), Haemonetics Corporation (NYSE:HAE), and Commercial Metals Company (NYSE:CMC). This group of stocks’ market caps match DPLO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNCR | 18 | 41763 | 2 |
| DM | 4 | 4142 | 4 |
| HAE | 16 | 112860 | -1 |
| CMC | 16 | 146335 | -2 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $21 million in DPLO’s case. Synchronoss Technologies, Inc. (NASDAQ:SNCR) is the most popular stock in this table. On the other hand The Dolan Company (NYSE:DM) is the least popular one with only 4 bullish hedge fund positions. Diplomat Pharmacy Inc (NYSE:DPLO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SNCR might be a better candidate to consider taking a long position in.
Disclosure: None
