Should You Buy Diamond Offshore Drilling Inc (DO)?

As industrywide interest jumped, key money managers have jumped into Diamond Offshore Drilling Inc (NYSE:DO) headfirst. Millennium Management, managed by Israel Englander, established the most valuable position in Diamond Offshore Drilling Inc (NYSE:DO). Millennium Management had $57.6 million invested in the company at the end of the quarter. Robert Vollero and Gentry T. Beach’s Vollero Beach Capital Partners also initiated a $5.7 million position during the quarter. The other funds with new positions in the stock are Jonathan Barrett and Paul Segal’s Luminus Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Diamond Offshore Drilling Inc (NYSE:DO) but similarly valued. We will take a look at IMAX Corporation (USA) (NYSE:IMAX), Franks International NV (NYSE:FI), NuVasive, Inc. (NASDAQ:NUVA), and HRG Group Inc (NYSE:HRG). All of these stocks’ market caps are similar to Diamond Offshore Drilling Inc (NYSE:DO)’s market cap.

As you can see, these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $615 million. That figure was $132 million in Diamond Offshore Drilling Inc (NYSE:DO)’s case. NuVasive, Inc. (NASDAQ:NUVA) is the most popular stock in this table. On the other hand, Franks International NV (NYSE:FI) is the least popular one with only 12 bullish hedge fund positions. Diamond Offshore Drilling Inc (NYSE:DO) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, NuVasive, Inc. (NASDAQ:NUVA) might be a better candidate to consider a long position.