What Makes Doximity (DOCS) a Good Short Position?

Diamond Hill Capital, an investment management company, released its “Long-Short Fund” second-quarter 2024 investor letter. A copy of the letter can be downloaded here. The portfolio achieved positive returns in Q2 but trailed the Russell 1000 Index and the blended benchmark (60% Russell 1000 Index/40% Bloomberg US Treasury Bills 1-3 Month Index). The short positions didn’t perform as well as the index, giving a relative tailwind to the performance. The long positions in industrials, materials, and real estate holdings contributed to relative strength. In addition, you may look at the fund’s top 5 holdings to learn about its best picks in 2024.

Diamond Hill Long-Short Fund highlighted stocks like Doximity, Inc. (NYSE:DOCS) in its Q2 2024 investor letter. Headquartered in San Francisco, California, Doximity, Inc. (NYSE:DOCS) provides a cloud platform for medical professionals. The one-month return of Doximity, Inc. (NYSE:DOCS) was 13.28%, and its shares gained 100.44% of their value over the last 52 weeks. On September 24, 2024, Doximity, Inc. (NYSE:DOCS) stock closed at $41.37 per share with a market capitalization of $7.681 billion.

Diamond Hill Long-Short Fund stated the following regarding Doximity, Inc. (NYSE:DOCS) in its Q2 2024 investor letter:

“We also initiated two new short positions in the quarter: Deckers Outdoor Corporation and Doximity, Inc. (NYSE:DOCS). Doximity operates an online platform for medical professionals that generates most of its revenue from digital advertising. We believe investors are too optimistic about user engagement and the company’s ability to grow its relationships with its largest customers and consequently initiated a short position in the quarter.”

A pathologist and a laboratory assistant in a laboratory researching medical news and data.

Doximity, Inc. (NYSE:DOCS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held Doximity, Inc. (NYSE:DOCS) at the end of the second quarter which was 23 in the previous quarter. In the first quarter of fiscal 2025, Doximity, Inc. (NYSE:DOCS) delivered $127 million of revenue, which represents 17% year-on-year increase. While we acknowledge the potential of Doximity, Inc. (NYSE:DOCS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.