In this article we will analyze whether DuPont de Nemours Inc (NYSE:DD) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is DuPont de Nemours Inc (NYSE:DD) the right pick for your portfolio? Prominent investors were in a pessimistic mood. The number of bullish hedge fund bets went down by 11 in recent months. DuPont de Nemours Inc (NYSE:DD) was in 49 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 82. Our calculations also showed that DD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 60 hedge funds in our database with DD holdings at the end of December.
According to most stock holders, hedge funds are assumed to be slow, old investment vehicles of years past. While there are greater than 8000 funds in operation today, We hone in on the upper echelon of this group, about 850 funds. These money managers have their hands on the lion’s share of the smart money’s total asset base, and by tracking their top picks, Insider Monkey has figured out a few investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
David S. Winter of 40 North Management
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Do Hedge Funds Think DD Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. By comparison, 54 hedge funds held shares or bullish call options in DD a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, 40 North Management was the largest shareholder of DuPont de Nemours Inc (NYSE:DD), with a stake worth $454.8 million reported as of the end of March. Trailing 40 North Management was Third Point, which amassed a stake valued at $206.7 million. D E Shaw, Laurion Capital Management, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position 40 North Management allocated the biggest weight to DuPont de Nemours Inc (NYSE:DD), around 12.57% of its 13F portfolio. SAYA Management is also relatively very bullish on the stock, dishing out 11.6 percent of its 13F equity portfolio to DD.
Judging by the fact that DuPont de Nemours Inc (NYSE:DD) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds that elected to cut their positions entirely in the first quarter. Interestingly, Andrew Hahn’s Ursa Fund Management dumped the biggest stake of all the hedgies tracked by Insider Monkey, worth about $702.7 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund sold off about $215.7 million worth. These transactions are interesting, as total hedge fund interest fell by 11 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to DuPont de Nemours Inc (NYSE:DD). These stocks are Lloyds Banking Group PLC (NYSE:LYG), IHS Markit Ltd. (NYSE:INFO), CrowdStrike Holdings, Inc. (NASDAQ:CRWD), BCE Inc. (NYSE:BCE), Parker-Hannifin Corporation (NYSE:PH), Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), and Bilibili Inc. (NASDAQ:BILI). All of these stocks’ market caps are closest to DD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LYG | 5 | 14096 | 0 |
| INFO | 54 | 4093725 | -5 |
| CRWD | 77 | 5257998 | -15 |
| BCE | 10 | 121896 | -3 |
| PH | 43 | 1259967 | -13 |
| ERIC | 19 | 317626 | -1 |
| BILI | 53 | 3015445 | 7 |
| Average | 37.3 | 2011536 | -4.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $2012 million. That figure was $1720 million in DD’s case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 5 bullish hedge fund positions. DuPont de Nemours Inc (NYSE:DD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DD is 42.5. 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 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately DD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DD were disappointed as the stock returned -0.7% since the end of March (through 6/18) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
