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Last year we predicted the arrival of the first US recession since 2009 and we told in advance 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 Dover Corporation (NYSE:DOV).
Is DOV stock a buy? Dover Corporation (NYSE:DOV) was in 32 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 40. DOV has experienced a decrease in hedge fund interest recently. There were 40 hedge funds in our database with DOV positions at the end of the third quarter. Our calculations also showed that DOV isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Robert Atchinson of Adage Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we're going to take a look at the fresh hedge fund action regarding Dover Corporation (NYSE:DOV).
Do Hedge Funds Think DOV Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the third quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in DOV a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Adage Capital Management held the most valuable stake in Dover Corporation (NYSE:DOV), which was worth $255 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $97.8 million worth of shares. D E Shaw, Holocene Advisors, and AQR Capital Management 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 Scopus Asset Management allocated the biggest weight to Dover Corporation (NYSE:DOV), around 0.6% of its 13F portfolio. Adage Capital Management is also relatively very bullish on the stock, designating 0.56 percent of its 13F equity portfolio to DOV.
Since Dover Corporation (NYSE:DOV) has faced bearish sentiment from the smart money, logic holds that there was a specific group of hedge funds that slashed their full holdings last quarter. Intriguingly, Renaissance Technologies cut the biggest investment of the 750 funds tracked by Insider Monkey, worth about $5.7 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also sold off its stock, about $3.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 8 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Dover Corporation (NYSE:DOV) but similarly valued. We will take a look at HubSpot Inc (NYSE:HUBS), Clarivate Plc (NYSE:CCC), The Cooper Companies, Inc. (NYSE:COO), Conagra Brands, Inc. (NYSE:CAG), Broadridge Financial Solutions, Inc. (NYSE:BR), Martin Marietta Materials, Inc. (NYSE:MLM), and NovoCure Limited (NASDAQ:NVCR). This group of stocks' market caps are similar to DOV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HUBS,52,1561960,12 CCC,40,5223432,3 COO,31,1349415,1 CAG,28,634446,-7 BR,25,244137,-8 MLM,41,2010592,3 NVCR,22,417787,0 Average,34.1,1634538,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.1 hedge funds with bullish positions and the average amount invested in these stocks was $1635 million. That figure was $739 million in DOV's case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand NovoCure Limited (NASDAQ:NVCR) is the least popular one with only 22 bullish hedge fund positions. Dover Corporation (NYSE:DOV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DOV is 37.7. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market by 1.5 percentage points. A small number of hedge funds were also right about betting on DOV, though not to the same extent, as the stock returned 11.7% since the end of Q4 (through April 12th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.