Is Donegal Group Inc (NASDAQ:DGICA) 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, 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.
Donegal Group Inc (NASDAQ:DGICA) was in 4 hedge funds’ portfolios at the end of June. DGICA has seen an increase in support from the world’s most elite money managers in recent months. There were 3 hedge funds in our database with DGICA positions at the end of the previous quarter. Our calculations also showed that DGICA isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are assumed to be worthless, old financial vehicles of the past. While there are greater than 8000 funds in operation at present, We hone in on the leaders of this club, around 750 funds. These investment experts direct most of the hedge fund industry’s total capital, and by tailing their finest picks, Insider Monkey has spotted various investment strategies that have historically outperformed the market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the recent hedge fund action surrounding Donegal Group Inc (NASDAQ:DGICA).
What does smart money think about Donegal Group Inc (NASDAQ:DGICA)?
Heading into the third quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in DGICA a year ago. So, let’s see 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, Renaissance Technologies has the biggest position in Donegal Group Inc (NASDAQ:DGICA), worth close to $8.1 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is David P. Cohen of Minerva Advisors, with a $0.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Israel Englander’s Millennium Management, Frederick DiSanto’s Ancora Advisors and .
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the largest position in Donegal Group Inc (NASDAQ:DGICA). Millennium Management had $0.4 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Donegal Group Inc (NASDAQ:DGICA) but similarly valued. These stocks are America First Multifamily Investors, L.P. (NASDAQ:ATAX), Briggs & Stratton Corporation (NYSE:BGG), Jernigan Capital Inc (NYSE:JCAP), and BioDelivery Sciences International, Inc. (NASDAQ:BDSI). All of these stocks’ market caps are similar to DGICA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATAX | 3 | 3357 | 1 |
| BGG | 11 | 19671 | 4 |
| JCAP | 15 | 39852 | 0 |
| BDSI | 16 | 118529 | -2 |
| Average | 11.25 | 45352 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $9 million in DGICA’s case. BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is the most popular stock in this table. On the other hand America First Multifamily Investors, L.P. (NASDAQ:ATAX) is the least popular one with only 3 bullish hedge fund positions. Donegal Group Inc (NASDAQ:DGICA) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately DGICA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); DGICA investors were disappointed as the stock returned -3% during the third 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
