Before we spend many hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Dun & Bradstreet Corporation (NYSE:DNB).
Dun & Bradstreet Corporation (NYSE:DNB) was in 34 hedge funds' portfolios at the end of the third quarter of 2018. DNB has experienced an increase in activity from the world's largest hedge funds recently. There were 24 hedge funds in our database with DNB holdings at the end of the previous quarter. Our calculations also showed that dnb isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 18 percentage points since May 2014 through December 3, 2018 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's analyze the recent hedge fund action surrounding Dun & Bradstreet Corporation (NYSE:DNB).
How are hedge funds trading Dun & Bradstreet Corporation (NYSE:DNB)?
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 42% from the second quarter of 2018. On the other hand, there were a total of 21 hedge funds with a bullish position in DNB at the beginning of this year. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Dun & Bradstreet Corporation (NYSE:DNB), which was worth $163.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $99.2 million worth of shares. Moreover, Sand Grove Capital Partners, Paulson & Co, and GLG Partners were also bullish on Dun & Bradstreet Corporation (NYSE:DNB), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, some big names have been driving this bullishness. Sand Grove Capital Partners, managed by Simon Davies, created the largest position in Dun & Bradstreet Corporation (NYSE:DNB). Sand Grove Capital Partners had $86.2 million invested in the company at the end of the quarter. John Paulson's Paulson & Co also made a $59.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Robert Emil Zoellner's Alpine Associates, Tom Sandell's Sandell Asset Management, and John Orrico's Water Island Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as The Dun & Bradstreet Corporation (NYSE:DNB) but similarly valued. We will take a look at H&R Block, Inc. (NYSE:HRB), Williams-Sonoma, Inc. (NYSE:WSM), Exelixis, Inc. (NASDAQ:EXEL), and Janus Henderson Group plc (NYSE:JHG). This group of stocks' market caps match DNB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HRB,18,182945,-2 WSM,23,560651,1 EXEL,23,679477,-1 JHG,17,183270,4 Average,20.25,401586,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $402 million. That figure was $793 million in DNB's case. Williams-Sonoma, Inc. (NYSE:WSM) is the most popular stock in this table. On the other hand Janus Henderson Group plc (NYSE:JHG) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Dun & Bradstreet Corporation (NYSE:DNB) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.