The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Deutsche Bank Aktiengesellschaft (NYSE:DB).
Deutsche Bank Aktiengesellschaft (NYSE:DB) has seen a decrease in activity from the world's largest hedge funds recently. Our calculations also showed that DB 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' 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 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 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.
We're going to view the key hedge fund action surrounding Deutsche Bank Aktiengesellschaft (NYSE:DB).
What does smart money think about Deutsche Bank Aktiengesellschaft (NYSE:DB)?
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards DB over the last 15 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Hudson Executive Capital was the largest shareholder of Deutsche Bank Aktiengesellschaft (NYSE:DB), with a stake worth $528.2 million reported as of the end of March. Trailing Hudson Executive Capital was Cerberus Capital Management, which amassed a stake valued at $505.2 million. Masters Capital Management, Granite Point Capital, and OZ Management were also very fond of the stock, giving the stock large weights in their portfolios.
Because Deutsche Bank Aktiengesellschaft (NYSE:DB) has witnessed declining sentiment from the entirety of the hedge funds we track, it's easy to see that there was a specific group of hedge funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Jeffrey Gendell's Tontine Asset Management dropped the biggest investment of all the hedgies tracked by Insider Monkey, valued at an estimated $16 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also said goodbye to its stock, about $5.4 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks similar to Deutsche Bank Aktiengesellschaft (NYSE:DB). These stocks are W.W. Grainger, Inc. (NYSE:GWW), Korea Electric Power Corporation (NYSE:KEP), Diamondback Energy Inc (NASDAQ:FANG), and Tenaris S.A. (NYSE:TS). This group of stocks' market values resemble DB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GWW,29,349124,6 KEP,10,37936,1 FANG,47,1854682,3 TS,15,775378,2 Average,25.25,754280,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $754 million. That figure was $1074 million in DB's case. Diamondback Energy Inc (NASDAQ:FANG) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 10 bullish hedge fund positions. Deutsche Bank Aktiengesellschaft (NYSE:DB) 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 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. Unfortunately DB wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); DB investors were disappointed as the stock returned -10.2% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.