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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Dorman Products Inc. (NASDAQ:DORM).
Dorman Products Inc. (NASDAQ:DORM) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that DORM isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare DORM to other stocks including Diodes Incorporated (NASDAQ:DIOD), Companhia Energética de Minas Gerais (NYSE:CIG), and Kohl's Corporation (NYSE:KSS) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are seen as unimportant, outdated financial tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our experts choose to focus on the moguls of this group, approximately 850 funds. These hedge fund managers command bulk of the hedge fund industry's total asset base, and by tailing their matchless investments, Insider Monkey has determined a few investment strategies that have historically surpassed the market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Noam Gottesman of GLG Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's take a look at the fresh hedge fund action regarding Dorman Products Inc. (NASDAQ:DORM).
Do Hedge Funds Think DORM Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DORM over the last 21 quarters. So, let's examine 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 $29 million at the end of the third quarter. On the second spot was Intrinsic Edge Capital which amassed $9.7 million worth of shares. Citadel Investment Group, Marshall Wace LLP, and Arrowstreet Capital 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 1.28% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, dishing out 0.65 percent of its 13F equity portfolio to DORM.
Seeing as Dorman Products Inc. (NASDAQ:DORM) has witnessed declining sentiment from the smart money, we can see that there were a few funds that elected to cut their positions entirely in the third quarter. It's worth mentioning that Israel Englander's Millennium Management said goodbye to the biggest investment of the 750 funds tracked by Insider Monkey, totaling about $6.2 million in stock. Michael Gelband's fund, ExodusPoint Capital, also sold off its stock, about $0.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Dorman Products Inc. (NASDAQ:DORM) but similarly valued. These stocks are Diodes Incorporated (NASDAQ:DIOD), Companhia Energética de Minas Gerais (NYSE:CIG), Kohl's Corporation (NYSE:KSS), John Bean Technologies Corporation (NYSE:JBT), Community Bank System, Inc. (NYSE:CBU), LGI Homes Inc (NASDAQ:LGIH), and GW Pharmaceuticals plc (NASDAQ:GWPH). All of these stocks' market caps are closest to DORM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DIOD,13,109463,-1 CIG,9,9794,0 KSS,38,451191,-4 JBT,21,99713,5 CBU,10,16857,-5 LGIH,25,143573,3 GWPH,17,201230,-1 Average,19,147403,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $74 million in DORM's case. Kohl's Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand Companhia Energética de Minas Gerais (NYSE:CIG) is the least popular one with only 9 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. Our overall hedge fund sentiment score for DORM is 52.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately DORM wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); DORM investors were disappointed as the stock returned 6.8% since the end of September (through 12/14) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.