Did Hedge Funds Drop The Ball On DHT Holdings Inc (DHT) ?
Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
Is DHT Holdings Inc (NYSE:DHT) a healthy stock for your portfolio? Money managers are taking a bearish view. The number of bullish hedge fund bets went down by 1 lately. Our calculations also showed that dht isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_324853" align="aligncenter" width="450"]
Joshua Friedman of Canyon Capital[/caption]
We're going to analyze the latest hedge fund action encompassing DHT Holdings Inc (NYSE:DHT).
How have hedgies been trading DHT Holdings Inc (NYSE:DHT)?
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 -6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DHT over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in DHT Holdings Inc (NYSE:DHT), which was worth $23.2 million at the end of the first quarter. On the second spot was Lansdowne Partners which amassed $13.7 million worth of shares. Moreover, Canyon Capital Advisors, SAYA Management, and Firefly Value Partners were also bullish on DHT Holdings Inc (NYSE:DHT), allocating a large percentage of their portfolios to this stock.
Because DHT Holdings Inc (NYSE:DHT) has experienced declining sentiment from the aggregate hedge fund industry, it's safe to say that there were a few hedgies who sold off their full holdings heading into Q3. Interestingly, Clint Carlson's Carlson Capital dumped the biggest investment of the 700 funds tracked by Insider Monkey, valued at close to $3.3 million in stock, and Kevin Michael Ulrich and Anthony Davis's Anchorage Advisors was right behind this move, as the fund dumped about $2.2 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as DHT Holdings Inc (NYSE:DHT) but similarly valued. These stocks are Preferred Apartment Communities Inc. (NYSE:APTS), Sonic Automotive Inc (NYSE:SAH), Care.com Inc (NYSE:CRCM), and Zumiez Inc. (NASDAQ:ZUMZ). All of these stocks' market caps match DHT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APTS,7,3491,5 SAH,11,14767,1 CRCM,18,152719,1 ZUMZ,13,33969,1 Average,12.25,51237,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $68 million in DHT's case. Care.com Inc (NYSE:CRCM) is the most popular stock in this table. On the other hand Preferred Apartment Communities Inc. (NYSE:APTS) is the least popular one with only 7 bullish hedge fund positions. DHT Holdings Inc (NYSE:DHT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on DHT as the stock returned 27% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
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