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 June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Deutsche Bank AG (NYSE:DB).
Deutsche Bank AG (NYSE:DB) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 24. DB has experienced an increase in hedge fund sentiment recently. There were 16 hedge funds in our database with DB holdings at the end of March. Our calculations also showed that DB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
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 are checking out stock pitches like this emerging lithium stock. 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. 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. Keeping this in mind let’s analyze the key hedge fund action encompassing Deutsche Bank AG (NYSE:DB).
Do Hedge Funds Think DB Is A Good Stock To Buy Now?
At the end of June, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the first quarter of 2020. By comparison, 11 hedge funds held shares or bullish call options in DB a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Hudson Executive Capital was the largest shareholder of Deutsche Bank AG (NYSE:DB), with a stake worth $878 million reported as of the end of June. Trailing Hudson Executive Capital was Cerberus Capital Management, which amassed a stake valued at $808.1 million. Masters Capital Management, Odey Asset Management Group, and Renaissance Technologies 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 Hudson Executive Capital allocated the biggest weight to Deutsche Bank AG (NYSE:DB), around 58.3% of its 13F portfolio. Cerberus Capital Management is also relatively very bullish on the stock, setting aside 18.62 percent of its 13F equity portfolio to DB.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. Granite Point Capital, managed by Warren Lammert, created the largest call position in Deutsche Bank AG (NYSE:DB). Granite Point Capital had $9.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $6.5 million position during the quarter. The other funds with brand new DB positions are Dmitry Balyasny’s Balyasny Asset Management, Michael Gelband’s ExodusPoint Capital, and Peter Muller’s PDT Partners.
Let’s now take a look at hedge fund activity in other stocks similar to Deutsche Bank AG (NYSE:DB). We will take a look at Laboratory Corp. of America Holdings (NYSE:LH), Hess Corporation (NYSE:HES), Tyson Foods, Inc. (NYSE:TSN), Fifth Third Bancorp (NASDAQ:FITB), Alexandria Real Estate Equities Inc (NYSE:ARE), Rogers Communications Inc. (NYSE:RCI), and Sirius XM Holdings Inc (NASDAQ:SIRI). This group of stocks’ market caps match DB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LH | 53 | 2555270 | -1 |
| HES | 31 | 615716 | 5 |
| TSN | 33 | 743751 | 5 |
| FITB | 41 | 360346 | 3 |
| ARE | 28 | 583759 | 1 |
| RCI | 17 | 357300 | -1 |
| SIRI | 26 | 577536 | 2 |
| Average | 32.7 | 827668 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $828 million. That figure was $1860 million in DB’s case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 17 bullish hedge fund positions. Deutsche Bank AG (NYSE:DB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DB is 38.2. 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 negative signal and 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 29.6% in 2021 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately DB wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DB investors were disappointed as the stock returned -1.7% since the end of June (through 11/5) 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 most of these stocks already outperformed the market in 2021.
Follow Deutsche Bank Ag (NYSE:DB)
Follow Deutsche Bank Ag (NYSE:DB)
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Disclosure: None. This article was originally published at Insider Monkey.
