Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Denison Mines Corp (NYSE:DNN), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Denison Mines Corp (NYSE:DNN) a healthy stock for your portfolio? Investors who are in the know were turning bullish. The number of bullish hedge fund bets rose by 2 in recent months. Denison Mines Corp (NYSE:DNN) was in 6 hedge funds' portfolios at the end of September. The all time high for this statistics is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DNN 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). There were 4 hedge funds in our database with DNN holdings at the end of June. 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 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Richard Gerson of Falcon Edge Capital
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 we're going to check out the recent hedge fund action regarding Denison Mines Corp (NYSE:DNN).
How have hedgies been trading Denison Mines Corp (NYSE:DNN)?
At Q3's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DNN 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.
Of the funds tracked by Insider Monkey, Falcon Edge Capital, managed by Richard Gerson and Navroz D. Udwadia, holds the most valuable position in Denison Mines Corp (NYSE:DNN). Falcon Edge Capital has a $4.1 million position in the stock, comprising 0.3% of its 13F portfolio. On Falcon Edge Capital's heels is Sprott Asset Management, led by Eric Sprott, holding a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that are bullish contain Robert Richards's Heathbridge Capital Management, Renaissance Technologies and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Falcon Edge Capital allocated the biggest weight to Denison Mines Corp (NYSE:DNN), around 0.34% of its 13F portfolio. Heathbridge Capital Management is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to DNN.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Renaissance Technologies, assembled the largest position in Denison Mines Corp (NYSE:DNN). Renaissance Technologies had $0.1 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $0 million position during the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Denison Mines Corp (NYSE:DNN) but similarly valued. These stocks are Whitestone REIT (NYSE:WSR), Liquidity Services, Inc. (NASDAQ:LQDT), Radiant Logistics, Inc. (NYSE:RLGT), Peoples Financial Services Corp. (NASDAQ:PFIS), Berry Corporation (NASDAQ:BRY), Veritone, Inc. (NASDAQ:VERI), and Trilogy Metals Inc. (NYSE:TMQ). This group of stocks' market caps are similar to DNN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WSR,8,9493,-1 LQDT,14,26500,5 RLGT,14,11973,4 PFIS,1,1911,0 BRY,14,45782,0 VERI,7,13372,2 TMQ,9,55612,2 Average,9.6,23520,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.6 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $5 million in DNN's case. Liquidity Services, Inc. (NASDAQ:LQDT) is the most popular stock in this table. On the other hand Peoples Financial Services Corp. (NASDAQ:PFIS) is the least popular one with only 1 bullish hedge fund positions. Denison Mines Corp (NYSE:DNN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DNN is 56.2. 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 November 27th and surpassed the market again by 16.1 percentage points. Unfortunately DNN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); DNN investors were disappointed as the stock returned -9.8% since the end of September (through 11/27) 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.