The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Daqo New Energy Corp (NYSE:DQ) and find out how it is affected by hedge funds’ moves.
Daqo New Energy Corp (NYSE:DQ) has seen a decrease in enthusiasm from smart money recently. It is important to note that the trading environment surrounding Daqo New Energy Corp (NYSE:DQ) took a similar turn, with the shares dropping 32.1% during the third quarter. For an in-depth understanding of the hedge fund behavior, we will cover hedge funds holding positions in the company, at the end of September.
The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Core Molding Technologies, Inc. (NYSEMKT:CMT), Neff Corp (NYSE:NEFF), and Luby’s, Inc. (NYSE:LUB) to gather more data points.
If you’d ask most stock holders, hedge funds are viewed as underperforming, old financial vehicles of the past. While there are greater than 8000 funds in operation at the moment, our researchers choose to focus on the upper echelon of this group, approximately 700 funds. These hedge fund managers shepherd most of the hedge fund industry’s total capital, and by keeping an eye on their highest performing equity investments, Insider Monkey has identified numerous investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Now, let’s take a peek at the key action encompassing Daqo New Energy Corp (NYSE:DQ).
How are hedge funds trading Daqo New Energy Corp (NYSE:DQ)?
Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decrease of 20% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund and institutional investor database, Quentec Asset Management, managed by Ken Hahn, holds the number one position in Daqo New Energy Corp (NYSE:DQ). Quentec Asset Management has a $9.8 million position in the stock, comprising 1.7% of its 13F portfolio. Coming in second is Jonathan Barrett and Paul Segal of Luminus Management, with a $5.4 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions contain Chuck Royce’s Royce & Associates, and Warren Lammert’s Granite Point Capital.