We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards D8 Holdings Corp. (NYSE:DEH).
Is DEH stock a buy? D8 Holdings Corp. (NYSE:DEH) shareholders have witnessed an increase in activity from the world's largest hedge funds in recent months. D8 Holdings Corp. (NYSE:DEH) was in 25 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 20 hedge funds in our database with DEH holdings at the end of September. Our calculations also showed that DEH isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Paul Glazer of Glazer Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 glance at the latest hedge fund action regarding D8 Holdings Corp. (NYSE:DEH).
Do Hedge Funds Think DEH Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DEH over the last 22 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in D8 Holdings Corp. (NYSE:DEH) was held by Glazer Capital, which reported holding $19.9 million worth of stock at the end of December. It was followed by Athanor Capital with a $17.1 million position. Other investors bullish on the company included Magnetar Capital, Glazer Capital, and Aristeia Capital. In terms of the portfolio weights assigned to each position Ratan Capital Group allocated the biggest weight to D8 Holdings Corp. (NYSE:DEH), around 0.87% of its 13F portfolio. Glazer Capital is also relatively very bullish on the stock, setting aside 0.71 percent of its 13F equity portfolio to DEH.
Consequently, some big names were breaking ground themselves. Athanor Capital, managed by Parvinder Thiara, created the largest position in D8 Holdings Corp. (NYSE:DEH). Athanor Capital had $17.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $9.9 million position during the quarter. The other funds with brand new DEH positions are Steven Clark's Omni Partners, Ken Griffin's Citadel Investment Group, and David Alexander Witkin's Beryl Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as D8 Holdings Corp. (NYSE:DEH) but similarly valued. We will take a look at Danaos Corporation (NYSE:DAC), Qutoutiao Inc. (NASDAQ:QTT), Precision BioSciences, Inc. (NASDAQ:DTIL), TrueCar Inc (NASDAQ:TRUE), OneWater Marine Inc. (NASDAQ:ONEW), Alexco Resource Corp. (NYSE:AXU), and Marinus Pharmaceuticals Inc (NASDAQ:MRNS). This group of stocks' market values are closest to DEH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DAC,11,71248,5 QTT,3,1298,-2 DTIL,11,28444,-3 TRUE,18,74082,0 ONEW,12,57509,1 AXU,3,1785,1 MRNS,17,188063,4 Average,10.7,60347,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $136 million in DEH's case. TrueCar Inc (NASDAQ:TRUE) is the most popular stock in this table. On the other hand Qutoutiao Inc. (NASDAQ:QTT) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks D8 Holdings Corp. (NYSE:DEH) is more popular among hedge funds. Our overall hedge fund sentiment score for DEH is 90. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately DEH wasn't nearly as popular as these 30 stocks and hedge funds that were betting on DEH were disappointed as the stock returned -2% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.