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 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Dorman Products Inc. (NASDAQ:DORM).
Dorman Products Inc. (NASDAQ:DORM) investors should pay attention to an increase in hedge fund interest in recent months. Our calculations also showed that DORM 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_845793" align="aligncenter" width="400"] Peter Rathjens of Arrowstreet Capital[/caption]
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. Now let's take a peek at the new hedge fund action regarding Dorman Products Inc. (NASDAQ:DORM).
What have hedge funds been doing with Dorman Products Inc. (NASDAQ:DORM)?
Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DORM over the last 18 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, Royce & Associates held the most valuable stake in Dorman Products Inc. (NASDAQ:DORM), which was worth $20.5 million at the end of the third quarter. On the second spot was Millennium Management which amassed $6.3 million worth of shares. Third Avenue Management, Citadel Investment Group, 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 Minerva Advisors allocated the biggest weight to Dorman Products Inc. (NASDAQ:DORM), around 1.08% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 1.06 percent of its 13F equity portfolio to DORM.
As industrywide interest jumped, specific money managers have jumped into Dorman Products Inc. (NASDAQ:DORM) headfirst. Winton Capital Management, managed by David Harding, assembled the most valuable position in Dorman Products Inc. (NASDAQ:DORM). Winton Capital Management had $0.4 million invested in the company at the end of the quarter. Hoon Kim's Quantinno Capital also made a $0.4 million investment in the stock during the quarter. The only other fund with a brand new DORM position is Noam Gottesman's GLG Partners.
Let's also examine hedge fund activity in other stocks similar to Dorman Products Inc. (NASDAQ:DORM). We will take a look at ExlService Holdings, Inc. (NASDAQ:EXLS), Progyny, Inc. (NASDAQ:PGNY), Otter Tail Corporation (NASDAQ:OTTR), and Commscope Holding Company Inc (NASDAQ:COMM). This group of stocks' market values are closest to DORM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXLS,15,46684,-3 PGNY,10,13623,2 OTTR,12,68853,1 COMM,26,597384,-3 Average,15.75,181636,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $40 million in DORM's case. Commscope Holding Company Inc (NASDAQ:COMM) is the most popular stock in this table. On the other hand Progyny, Inc. (NASDAQ:PGNY) is the least popular one with only 10 bullish hedge fund positions. Dorman Products Inc. (NASDAQ:DORM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 and surpassed the market by 16.8 percentage points. Unfortunately DORM wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); DORM investors were disappointed as the stock returned 18.7% during the second quarter 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.