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Hedge Funds Are Done Buying DHT Holdings Inc (DHT)?

Abigail Fisher

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of DHT Holdings Inc (NYSE:DHT).

DHT Holdings Inc (NYSE:DHT) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 34 hedge funds' portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT), Eldorado Resorts Inc (NASDAQ:ERI), and Enable Midstream Partners LP (NYSE:ENBL) to gather more data points. Our calculations also showed that DHT 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.

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 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_221400" align="aligncenter" width="399"] Crispin Odey of Odey Asset Management Group[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a look at the recent hedge fund action regarding DHT Holdings Inc (NYSE:DHT).

What does smart money think about DHT Holdings Inc (NYSE:DHT)?

At Q1's end, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in DHT over the last 18 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in DHT Holdings Inc (NYSE:DHT), worth close to $77.9 million, corresponding to 0.1% of its total 13F portfolio. On Renaissance Technologies's heels is Ken Griffin of Citadel Investment Group, with a $28.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism include Jeremy Hosking's Hosking Partners, Ryan Heslop and Ariel Warszawski's Firefly Value Partners and Crispin Odey's Odey Asset Management Group. In terms of the portfolio weights assigned to each position Highline Capital Management allocated the biggest weight to DHT Holdings Inc (NYSE:DHT), around 3.04% of its 13F portfolio. Firefly Value Partners is also relatively very bullish on the stock, earmarking 2.84 percent of its 13F equity portfolio to DHT.

Judging by the fact that DHT Holdings Inc (NYSE:DHT) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that slashed their full holdings last quarter. Intriguingly, Andrew Weiss's Weiss Asset Management sold off the biggest investment of the 750 funds tracked by Insider Monkey, valued at about $9.8 million in stock, and Matthew L Pinz's Pinz Capital was right behind this move, as the fund dumped about $3.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as DHT Holdings Inc (NYSE:DHT) but similarly valued. We will take a look at Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT), Eldorado Resorts Inc (NASDAQ:ERI), Enable Midstream Partners LP (NYSE:ENBL), and Texas Capital Bancshares Inc (NASDAQ:TCBI). This group of stocks' market valuations are similar to DHT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARQT,8,553112,8 ERI,39,278872,-10 ENBL,6,6540,2 TCBI,19,52354,-7 Average,18,222720,-1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $223 million. That figure was $263 million in DHT's case. Eldorado Resorts Inc (NASDAQ:ERI) is the most popular stock in this table. On the other hand Enable Midstream Partners LP (NYSE:ENBL) is the least popular one with only 6 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. 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately DHT wasn't nearly as popular as these 10 stocks and hedge funds that were betting on DHT were disappointed as the stock returned -18% 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.

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

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