After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards DLH Holdings Corp. (NASDAQ:DLHC).
Is DLH Holdings Corp. (NASDAQ:DLHC) ready to rally soon? The best stock pickers were becoming less confident. The number of long hedge fund bets went down by 2 recently. DLH Holdings Corp. (NASDAQ:DLHC) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 8. Our calculations also showed that DLHC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 8 hedge funds in our database with DLHC holdings at the end of December.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Louis Navellier of Navellier & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a gander at the key hedge fund action surrounding DLH Holdings Corp. (NASDAQ:DLHC).
Do Hedge Funds Think DLHC Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DLHC over the last 23 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in DLH Holdings Corp. (NASDAQ:DLHC) was held by Wynnefield Capital, which reported holding $38.4 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $4.4 million position. Other investors bullish on the company included Ancora Advisors, Minerva Advisors, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Wynnefield Capital allocated the biggest weight to DLH Holdings Corp. (NASDAQ:DLHC), around 19.14% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, earmarking 0.82 percent of its 13F equity portfolio to DLHC.
Since DLH Holdings Corp. (NASDAQ:DLHC) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few money managers that slashed their positions entirely heading into Q2. Intriguingly, Jeffrey Bronchick’s Cove Street Capital sold off the largest position of the 750 funds followed by Insider Monkey, worth close to $4.4 million in stock, and Louis Navellier’s Navellier & Associates was right behind this move, as the fund sold off about $0.1 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds heading into Q2.
Let’s now review hedge fund activity in other stocks similar to DLH Holdings Corp. (NASDAQ:DLHC). We will take a look at Geospace Technologies Corp (NASDAQ:GEOS), Galectin Therapeutics Inc. (NASDAQ:GALT), Q&K International Group Limited (NASDAQ:QK), Biolase Inc (NASDAQ:BIOL), iMedia Brands, Inc. (NASDAQ:IMBI), Old Point Financial Corporation (NASDAQ:OPOF), and First United Corp (NASDAQ:FUNC). All of these stocks’ market caps are closest to DLHC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GEOS | 5 | 8506 | -3 |
| GALT | 3 | 791 | -1 |
| QK | 1 | 34 | 0 |
| BIOL | 3 | 2375 | 0 |
| IMBI | 5 | 11520 | 3 |
| OPOF | 2 | 1411 | 0 |
| FUNC | 2 | 4659 | -3 |
| Average | 3 | 4185 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $46 million in DLHC’s case. Geospace Technologies Corp (NASDAQ:GEOS) is the most popular stock in this table. On the other hand Q&K International Group Limited (NASDAQ:QK) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks DLH Holdings Corp. (NASDAQ:DLHC) is more popular among hedge funds. Our overall hedge fund sentiment score for DLHC is 75.5. 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. 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 returned 19.3% in 2021 through June 25th but still managed to beat the market by 4.8 percentage points. Hedge funds were also right about betting on DLHC as the stock returned 15.8% since the end of March (through 6/25) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
