The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Deutsche Bank AG (USA) (NYSE:DB).
Deutsche Bank AG (USA) (NYSE:DB) has experienced a decrease in activity from the world’s largest hedge funds in recent months. Deutsche Bank AG (USA) (NYSE:DB) was in 8 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with Deutsche Bank AG (USA) (NYSE:DB) positions at the end of the previous quarter. Its stock lost 10.61% value in the third quarter, keeping the market sentiment in alignment with the mood of the hedgies. For an in-depth understanding of the hedge fund behavior, we decided to cover hedge funds that had investments in Deutsche Bank AG (USA) (NYSE:DB), at the end of the September quarter.
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 Anthem Inc (NYSE:ANTM), Public Storage (NYSE:PSA), and PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ) to gather more data points.
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If you’d ask most market participants, hedge funds are seen as underperforming, old financial tools of years past. While there are greater than 8000 funds trading today, we choose to focus on the top tier of this group, around 700 funds. These hedge fund managers manage the majority of the hedge fund industry’s total asset base, and by monitoring their top equity investments, Insider Monkey has spotted various investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, let’s check out the new action encompassing Deutsche Bank AG (USA) (NYSE:DB).
What have hedge funds been doing with Deutsche Bank AG (USA) (NYSE:DB)?
Heading into Q4, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a decrease of 33% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Crispin Odey’s Odey Asset Management Group has the largest position in Deutsche Bank AG (USA) (NYSE:DB), worth close to $69.5 million, accounting for 5.5% of its total 13F portfolio. Coming in second is HBK Investments, managed by David Costen Haley, which holds a $27 million call position; 0.3% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions include Matthew Hulsizer’s PEAK6 Capital Management, and Cliff Asness’ AQR Capital Management.
Since Deutsche Bank AG (USA) (NYSE:DB) has faced a declination in interest from the smart money, it’s easy to see that there was a specific group of fund managers who sold off their entire stakes by the end of the third quarter. It’s worth mentioning that Michael Messner’s Seminole Capital (Investment Mgmt) cut the biggest stake of the 700 funds watched by Insider Monkey, valued at an estimated $7.8 million in stock. Porter Collins, Daniel Moses, and Vincent Daniel’s fund, Seawolf Capital, also said goodbye to its stock, about $5.4 million worth of shares. These moves are interesting, as total hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Deutsche Bank AG (USA) (NYSE:DB) but similarly valued. These stocks are Anthem Inc (NYSE:ANTM), Public Storage (NYSE:PSA), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ), and LIBERTY GLOBAL PLC (NASDAQ:LBTYK). This group of stocks’ market caps are similar to Deutsche Bank AG (USA) (NYSE:DB)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ANTM | 55 | 3154504 | -5 |
| PSA | 21 | 653333 | -1 |
| QQQ | 23 | 852206 | 2 |
| LBTYK | 89 | 8277984 | 1 |
As you can see, these stocks had an average of 47 hedge funds with bullish positions and the average amount invested in these stocks was $3.24 billion. That figure was $133 million in Deutsche Bank AG (USA) (NYSE:DB)’s case. LIBERTY GLOBAL PLC (NASDAQ:LBTYK) is the most popular stock in this table. On the other hand, Public Storage (NYSE:PSA) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Deutsche Bank AG (USA) (NYSE:DB) is even less popular than Public Storage (NYSE:PSA). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.
