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Should You Buy Diamond Offshore Drilling Inc (DO)?

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It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Diamond Offshore Drilling Inc (NYSE:DO) during the quarter below.

Diamond Offshore Drilling Inc (NYSE:DO) has experienced an increase in hedge fund interest recently. At the end of this article, we will also compare Diamond Offshore Drilling Inc (NYSE:DO) to other stocks, including IMAX Corporation (USA) (NYSE:IMAX), Franks International NV (NYSE:FI), and NuVasive, Inc. (NASDAQ:NUVA) to get a better sense of its popularity.

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If you’d ask most investors, hedge funds are seen as slow, old investment tools of the past. While there are over 8000 funds trading today, our researchers choose to focus on the leaders of this club, about 700 funds. Most estimates calculate that this group of people administers the majority of the smart money’s total capital, and by tailing their best equity investments, Insider Monkey has uncovered various investment strategies that have historically outpaced Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, we’re going to take a peek at the fresh action encompassing Diamond Offshore Drilling Inc (NYSE:DO).

How have hedgies been trading Diamond Offshore Drilling Inc (NYSE:DO)?

At the end of September, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 30% from the second quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the biggest position in Diamond Offshore Drilling Inc (NYSE:DO), worth close to $57.6 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $16.4 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish consist of Chuck Royce’s Royce & Associates, Robert Pitts’ Steadfast Capital Management, and George Hall’s Clinton Group.

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