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How Does DMC Global Inc (BOOM) Stack Up Against Its Peers?

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We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards DMC Global Inc (NASDAQ:BOOM), and what that likely means for the prospects of the company and its stock.

DMC Global Inc (NASDAQ:BOOM) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of September, same as at the end of June. 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 NCI Inc (NASDAQ:NCIT), Vuzix Corporation (NASDAQ:VUZI), and Provident Financial Holdings, Inc. (NASDAQ:PROV) to gather more data points.

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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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Hedge fund activity in DMC Global Inc (NASDAQ:BOOM)

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. There were also 7 hedge funds with a bullish position in BOOM at the beginning of this year, with sentiment remaining flat all year. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

BOOM Chart

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Peter Schliemann’s Rutabaga Capital Management has the largest position in DMC Global Inc (NASDAQ:BOOM), worth close to $6.7 million, amounting to 1.3% of its total 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, which holds a $6.4 million position. Remaining hedge funds and institutional investors with similar optimism comprise Bryant Regan’s Lafitte Capital Management, Renaissance Technologies, one of the largest hedge funds in the world, and David E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

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