Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in E I Du Pont De Nemours And Co (NYSE:DD)? The smart money sentiment can provide an answer to this question.
E I Du Pont De Nemours And Co (NYSE:DD) shares haven’t seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 36 hedge funds’ portfolios at the end of September. At the end of this article we will also compare DD to other stocks including Banco Santander, S.A. (ADR) (NYSE:SAN), Itau Unibanco Holding SA (ADR) (NYSE:ITUB), and BlackRock, Inc. (NYSE:BLK) to get a better sense of its popularity.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
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Keeping this in mind, we’re going to view the latest action surrounding E I Du Pont De Nemours And Co (NYSE:DD).
Hedge fund activity in E I Du Pont De Nemours And Co (NYSE:DD)
At Q3’s end, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Nelson Peltz’s Trian Partners has the biggest position in E I Du Pont De Nemours And Co (NYSE:DD), worth close to $1.17 billion, comprising 11.4% of its total 13F portfolio. Sitting at the No. 2 spot is Jonathon Jacobson of Highfields Capital Management, with a $522.8 million position; 4.9% of the fund’s 13F portfolio is allocated to the stock. Some other professional money managers that are bullish include Daniel S. Och’s OZ Management, Mason Hawkins’s Southeastern Asset Management and John Overdeck and David Siegel’s Two Sigma Advisors.
Seeing as E I Du Pont De Nemours And Co (NYSE:DD) has registered no change in interest from the aggregate hedge fund industry, it’s important to take a look at the hedgies that slashed their full holdings last quarter. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group dropped the biggest stake of all the hedgies followed by Insider Monkey, comprising close to $13 million in stock, and Clint Carlson’s Carlson Capital was right behind this move, as the fund dropped about $11.3 million worth of shares. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to E I Du Pont De Nemours And Co (NYSE:DD). These stocks are Banco Santander, S.A. (ADR) (NYSE:SAN), Itau Unibanco Holding SA (ADR) (NYSE:ITUB), BlackRock, Inc. (NYSE:BLK), and The Dow Chemical Company (NYSE:DOW). This group of stocks’ market values match DD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAN | 16 | 201876 | 0 |
| ITUB | 24 | 770320 | 2 |
| BLK | 30 | 397378 | 3 |
| DOW | 47 | 2686024 | -1 |
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1.01 billion. That figure was $3.46 billion in DD’s case. The Dow Chemical Company (NYSE:DOW) is the most popular stock in this table. On the other hand Banco Santander, S.A. (ADR) (NYSE:SAN) is the least popular one with only 16 bullish hedge fund positions. E I Du Pont De Nemours And Co (NYSE:DD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DOW might be a better candidate to consider a long position.
Disclosure: none.
