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. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2019. What do these smart investors think about Diamond S Shipping Inc. (NYSE:DSSI)?
Is Diamond S Shipping Inc. (NYSE:DSSI) ready to rally soon? The smart money is turning bullish. The number of bullish hedge fund positions went up by 4 recently. Our calculations also showed that DSSI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_255014" align="aligncenter" width="450"] Clint Carlson of Carlson Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind let's take a gander at the latest hedge fund action encompassing Diamond S Shipping Inc. (NYSE:DSSI).
What have hedge funds been doing with Diamond S Shipping Inc. (NYSE:DSSI)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in DSSI over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Wilbur Ross's Invesco Private Capital (WL Ross) has the largest position in Diamond S Shipping Inc. (NYSE:DSSI), worth close to $106.9 million, comprising 29.3% of its total 13F portfolio. The second largest stake is held by Prem Watsa of Fairfax Financial Holdings, with a $11.4 million position; 0.5% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism comprise Nathaniel August's Mangrove Partners, Ari Zweiman's 683 Capital Partners and Clint Carlson's Carlson Capital. In terms of the portfolio weights assigned to each position Invesco Private Capital (WL Ross) allocated the biggest weight to Diamond S Shipping Inc. (NYSE:DSSI), around 29.26% of its 13F portfolio. GeoSphere Capital Management is also relatively very bullish on the stock, setting aside 2.79 percent of its 13F equity portfolio to DSSI.
Now, key money managers were breaking ground themselves. Mangrove Partners, managed by Nathaniel August, initiated the biggest position in Diamond S Shipping Inc. (NYSE:DSSI). Mangrove Partners had $5.6 million invested in the company at the end of the quarter. Arvind Sanger's GeoSphere Capital Management also made a $0.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Gavin Saitowitz and Cisco J. del Valle's Springbok Capital and Mike Vranos's Ellington.
Let's check out hedge fund activity in other stocks similar to Diamond S Shipping Inc. (NYSE:DSSI). These stocks are Penn Virginia Corporation (NASDAQ:PVAC), SI-BONE, Inc. (NASDAQ:SIBN), Maverix Metals Inc. (NYSE:MMX), and IES Holdings, Inc. (NASDAQ:IESC). This group of stocks' market values are closest to DSSI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PVAC,16,183867,-1 SIBN,7,38943,-2 MMX,1,963,0 IESC,8,275175,3 Average,8,124737,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $139 million in DSSI's case. Penn Virginia Corporation (NASDAQ:PVAC) is the most popular stock in this table. On the other hand Maverix Metals Inc. (NYSE:MMX) is the least popular one with only 1 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on DSSI as the stock returned 30.9% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.