Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards DuPont de Nemours Inc (NYSE:DD) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is DuPont de Nemours Inc (NYSE:DD) a first-rate investment now? Money managers were in a bearish mood. The number of bullish hedge fund positions went down by 6 lately. DuPont de Nemours Inc (NYSE:DD) was in 51 hedge funds’ portfolios at the end of September. 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 Q3 rankings).
Larry Robbins of Glenview Capital
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 we’re going to review the key hedge fund action regarding DuPont de Nemours Inc (NYSE:DD).
Do Hedge Funds Think DD Is A Good Stock To Buy Now?
At Q3’s end, a total of 51 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. By comparison, 61 hedge funds held shares or bullish call options in DD a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, 40 North Management held the most valuable stake in DuPont de Nemours Inc (NYSE:DD), which was worth $331.5 million at the end of the third quarter. On the second spot was Third Point which amassed $202.3 million worth of shares. Arrowstreet Capital, D E Shaw, and Glenview 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 SAYA Management allocated the biggest weight to DuPont de Nemours Inc (NYSE:DD), around 14.21% of its 13F portfolio. 40 North Management is also relatively very bullish on the stock, designating 10.21 percent of its 13F equity portfolio to DD.
Judging by the fact that DuPont de Nemours Inc (NYSE:DD) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of fund managers that slashed their positions entirely by the end of the third quarter. At the top of the heap, Michael Cowley’s Sandbar Asset Management dropped the largest investment of the 750 funds watched by Insider Monkey, worth an estimated $15.7 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also sold off its stock, about $9.4 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 6 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks similar to DuPont de Nemours Inc (NYSE:DD). These stocks are KKR & Co Inc. (NYSE:KKR), Otis Worldwide Corporation (NYSE:OTIS), AFLAC Incorporated (NYSE:AFL), The Hershey Company (NYSE:HSY), NatWest Group plc (NYSE:NWG), Welltower Inc. (NYSE:WELL), and TransDigm Group Incorporated (NYSE:TDG). This group of stocks’ market values resemble DD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KKR | 56 | 4652455 | 2 |
| OTIS | 46 | 2206787 | 1 |
| AFL | 34 | 223946 | 1 |
| HSY | 33 | 1274071 | -5 |
| NWG | 7 | 8068 | 2 |
| WELL | 22 | 508861 | 3 |
| TDG | 63 | 7188554 | 6 |
| Average | 37.3 | 2294677 | 1.4 |
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 $2295 million. That figure was $1498 million in DD’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 7 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 56.9. 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 gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on DD as the stock returned 13.1% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Dupont (Old Filings) (NYSE:DD)
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Disclosure: None. This article was originally published at Insider Monkey.
