As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Dolby Laboratories, Inc. (NYSE:DLB).
Is DLB a good stock to buy? Investors who are in the know were getting more bullish. The number of bullish hedge fund bets advanced by 2 in recent months. Dolby Laboratories, Inc. (NYSE:DLB) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that DLB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Donald Sussman of Paloma Partners
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. Now let’s take a look at the latest hedge fund action regarding Dolby Laboratories, Inc. (NYSE:DLB).
Do Hedge Funds Think DLB Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DLB over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Dolby Laboratories, Inc. (NYSE:DLB) was held by SoMa Equity Partners, which reported holding $202.4 million worth of stock at the end of September. It was followed by Polar Capital with a $93.9 million position. Other investors bullish on the company included AQR Capital Management, Renaissance Technologies, and Sunriver Management. In terms of the portfolio weights assigned to each position Ararat Capital allocated the biggest weight to Dolby Laboratories, Inc. (NYSE:DLB), around 6.8% of its 13F portfolio. SoMa Equity Partners is also relatively very bullish on the stock, earmarking 5.44 percent of its 13F equity portfolio to DLB.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. PEAK6 Capital Management, managed by Matthew Hulsizer, established the biggest call position in Dolby Laboratories, Inc. (NYSE:DLB). PEAK6 Capital Management had $3.5 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $2 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Donald Sussman’s Paloma Partners, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Dolby Laboratories, Inc. (NYSE:DLB). These stocks are Genpact Limited (NYSE:G), UGI Corp (NYSE:UGI), Lamb Weston Holdings, Inc. (NYSE:LW), Anaplan, Inc. (NYSE:PLAN), SiteOne Landscape Supply, Inc. (NYSE:SITE), Sibanye Stillwater Limited (NYSE:SBSW), and Credicorp Ltd. (NYSE:BAP). This group of stocks’ market caps resemble DLB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| G | 24 | 299354 | 2 |
| UGI | 20 | 128595 | -3 |
| LW | 31 | 426705 | -5 |
| PLAN | 61 | 2812127 | 9 |
| SITE | 15 | 120291 | -10 |
| SBSW | 9 | 141727 | -6 |
| BAP | 15 | 188052 | -4 |
| Average | 25 | 588122 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $588 million. That figure was $521 million in DLB’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand Sibanye Stillwater Limited (NYSE:SBSW) is the least popular one with only 9 bullish hedge fund positions. Dolby Laboratories, Inc. (NYSE:DLB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DLB is 58.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 5.6 percentage points. Unfortunately DLB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DLB were disappointed as the stock returned -4.9% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Dolby Laboratories Inc. (NYSE:DLB)
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Disclosure: None. This article was originally published at Insider Monkey.
