At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Diamond S Shipping Inc. (NYSE:DSSI).
Diamond S Shipping Inc. (NYSE:DSSI) has experienced a decrease in hedge fund sentiment in recent months. Our calculations also showed that DSSI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are viewed as slow, old investment tools of the past. While there are more than 8000 funds with their doors open at present, Our researchers hone in on the masters of this group, around 850 funds. These money managers command bulk of the hedge fund industry's total asset base, and by monitoring their inimitable picks, Insider Monkey has come up with various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's go over the latest hedge fund action regarding Diamond S Shipping Inc. (NYSE:DSSI).
Hedge fund activity in Diamond S Shipping Inc. (NYSE:DSSI)
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the fourth quarter of 2019. On the other hand, there were a total of 7 hedge funds with a bullish position in DSSI a year ago. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Mangrove Partners held the most valuable stake in Diamond S Shipping Inc. (NYSE:DSSI), which was worth $18.6 million at the end of the third quarter. On the second spot was Fairfax Financial Holdings which amassed $12.1 million worth of shares. 683 Capital Partners, Carlson Capital, and D E Shaw 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 Mangrove Partners allocated the biggest weight to Diamond S Shipping Inc. (NYSE:DSSI), around 2.57% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, setting aside 1 percent of its 13F equity portfolio to DSSI.
Seeing as Diamond S Shipping Inc. (NYSE:DSSI) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few hedge funds who were dropping their positions entirely by the end of the first quarter. At the top of the heap, Israel Englander's Millennium Management said goodbye to the largest position of all the hedgies monitored by Insider Monkey, totaling close to $5.3 million in stock, and Wayne Cooperman's Cobalt Capital Management was right behind this move, as the fund dumped about $3.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks similar to Diamond S Shipping Inc. (NYSE:DSSI). These stocks are Brigham Minerals, Inc. (NYSE:MNRL), Enova International Inc (NYSE:ENVA), Pacific Biosciences of California (NASDAQ:PACB), and Mesoblast Limited (NASDAQ:MESO). This group of stocks' market caps are closest to DSSI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MNRL,19,54263,-4 ENVA,17,81510,-4 PACB,18,75493,-5 MESO,4,1302,3 Average,14.5,53142,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $51 million in DSSI's case. Brigham Minerals, Inc. (NYSE:MNRL) is the most popular stock in this table. On the other hand Mesoblast Limited (NASDAQ:MESO) is the least popular one with only 4 bullish hedge fund positions. Diamond S Shipping Inc. (NYSE:DSSI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately DSSI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on DSSI were disappointed as the stock returned -31.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.