Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is where they often generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Dice Holdings, Inc. (NYSE:DHX) was in 16 hedge funds’ portfolios at the end of September. DHX investors should be aware of a decrease in hedge fund sentiment recently. There were 16 hedge funds in our database with DHX holdings at the end of the previous quarter. At the end of this article, we will also compare DHX to other stocks including AgroFresh Solutions Inc (NASDAQ:AGFS), Castlight Health Inc (NYSE:CSLT), and Idera Pharmaceuticals Inc (NASDAQ:IDRA) to get a better sense of its popularity.
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To most market participants, hedge funds are seen as slow, old investment vehicles of years past. While there are over 8000 funds with their doors open today, we choose to focus on the top tier of this club, around 700 funds. Most estimates calculate that this group of people handle bulk of the smart money’s total capital, and by tailing their unrivaled picks, Insider Monkey has determined several investment strategies that have historically outpaced the broader indices. 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.
Keeping this in mind, we’re going to check out the key action regarding Dice Holdings, Inc. (NYSE:DHX).
How are hedge funds trading Dice Holdings, Inc. (NYSE:DHX)?
At Q3’s end, a total of 16 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 sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Legg Mason Capital Management, managed by Bill Miller, holds the number one position in Dice Holdings Inc. (NYSE:DHX). Legg Mason Capital Management has a $6 million position in the stock, comprising 0.1% of its 13F portfolio. On Legg Mason Capital Management’s heels is Eric Semler of TCS Capital Management, with a $4.4 million position; 3.5% of its 13F portfolio is allocated to the company. Other peers that hold long positions consist of D. E. Shaw’s D E Shaw, Jim Simons’s Renaissance Technologies and Cliff Asness’s AQR Capital Management.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Tudor Investment Corp. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was “Fisher Asset Management).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Dice Holdings Inc. (NYSE:DHX) but similarly valued. We will take a look at AgroFresh Solutions Inc (NASDAQ:AGFS), Castlight Health Inc (NYSE:CSLT), Idera Pharmaceuticals Inc (NASDAQ:IDRA), and Culp, Inc. (NYSE:CFI). This group of stocks’ market caps resemble DHX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGFS | 23 | 69063 | 1 |
| CSLT | 14 | 28781 | -2 |
| IDRA | 14 | 53318 | 0 |
| CFI | 15 | 45947 | 1 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $25 million in DHX’s case. AgroFresh Solutions Inc (NASDAQ:AGFS) is the most popular stock in this table, while the least popular one is Castlight Health Inc NYSE:CSLT). Although it is not the least popular among these stocks, Dice Holdings Inc. (NYSE:DHX) has not attracted much attention from hedge funds. This may indicate that it is not a good stock to buy; hence we’d rather spend our time researching stocks that hedge funds are collectively the most bullish on, such as AgroFresh Solutions Inc (NASDAQ:AGFS) in this particular case.
