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Is Credit Suisse High Yield Bond Fund (ETF) (DHY) A Good Stock To Buy?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Credit Suisse High Yield Bond Fund (ETF) (NYSEMKT:DHY).

Credit Suisse High Yield Bond Fund (ETF) (NYSEMKT:DHY) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. 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 Black Box Corporation (NASDAQ:BBOX), Strattec Security Corp. (NASDAQ:STRT), and Penn West Petroleum Ltd (USA) (NYSE:PWE) to gather more data points.

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In the eyes of most shareholders, hedge funds are assumed to be slow, old investment tools of yesteryear. While there are over 8000 funds with their doors open at present, Our researchers choose to focus on the upper echelon of this club, approximately 700 funds. Most estimates calculate that this group of people command bulk of the hedge fund industry’s total asset base, and by keeping track of their finest equity investments, Insider Monkey has unsheathed a number of investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, we’re going to take a look at the fresh action encompassing Credit Suisse High Yield Bond Fund (ETF) (NYSEMKT:DHY).

How have hedgies been trading Credit Suisse High Yield Bond Fund (ETF) (NYSEMKT:DHY)?

Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, William Michaelcheck’s Mariner Investment Group has the most valuable position in Credit Suisse High Yield Bond Fund (ETF) (NYSEMKT:DHY), worth close to $1.3 million, amounting to 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Charles Clough of Clough Capital Partners, with an $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish contain Benjamin A. Smith’s Laurion Capital Management, Allan Teh’s Kamunting Street Capital and .

Due to the fact that Credit Suisse High Yield Bond Fund (ETF) (NYSEMKT:DHY) has witnessed a declination in interest from hedge fund managers, we can see that there lies a certain “tier” of funds that slashed their entire stakes by the end of the third quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group dumped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, valued at close to $0 million in stock, and James Dondero’s Highland Capital Management was right behind this move, as the fund dropped about $0 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to Credit Suisse High Yield Bond Fund (ETF) (NYSEMKT:DHY). We will take a look at Black Box Corporation (NASDAQ:BBOX), Strattec Security Corp. (NASDAQ:STRT), Penn West Petroleum Ltd (USA) (NYSE:PWE), and Atlantic Power Corp (NYSE:AT). This group of stocks’ market values resemble DHY’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBOX 11 12053 -2
STRT 5 52815 1
PWE 15 12696 0
AT 12 32218 -1

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $2 million in DHY’s case. The most popular stock in the table is Penn West Petroleum Ltd (USA) (NYSE:PWE), while the least popular one is Strattec Security Corp. (NASDAQ:STRT). In comparison, with only 4 bullish hedge fund positions, Credit Suisse High Yield Bond Fund (ETF) (NYSEMKT:DHY) is definitely the least popular stock in this particular group. To comprehend why the smart money isn’t behind this stock and why hedge funds aren’t collectively the most fond of it, further research is needed. Keep in mind, that this doesn’t necessarily means it is not a good stock to buy. It is possible that investors weren’t familiar with the bullish thesis when they thought of the stock as overvalued. In any case, more analyses are advisable.

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