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Is Deutsche Bank AG (DB) Going to Burn These Hedge Funds?

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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Deutsche Bank AG (NYSE:DB).

Deutsche Bank AG (NYSE:DB) investors should be aware of an increase in hedge fund interest lately. Deutsche Bank AG (NYSE:DB) was in 20 hedge funds' portfolios at the end of June. The all time high for this statistic is 24. 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.

Stephen Feinberg Cerberus Capital
Stephen Feinberg Cerberus Capital

Stephen Feinberg of Cerberus Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, 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 take a peek at the latest hedge fund action regarding 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 previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in DB 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.

Is DB A Good Stock To Buy?
Is DB A Good Stock To Buy?

The largest stake in Deutsche Bank AG (NYSE:DB) was held by Hudson Executive Capital, which reported holding $878 million worth of stock at the end of June. It was followed by Cerberus Capital Management with a $808.1 million position. Other investors bullish on the company included Masters Capital Management, Odey Asset Management Group, and Renaissance Technologies. 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, dishing out 18.62 percent of its 13F equity portfolio to DB.

As aggregate interest increased, key money managers have been driving this bullishness. Granite Point Capital, managed by Warren Lammert, assembled 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 new positions in the stock are Dmitry Balyasny's Balyasny Asset Management, Michael Gelband's ExodusPoint Capital, and Peter Muller's PDT Partners.

Let's check out hedge fund activity in other stocks similar to Deutsche Bank AG (NYSE:DB). These stocks are 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). All of these stocks' market caps are closest to DB's market cap.

[table] 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 [/table]

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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on DB as the stock returned 4.2% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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