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Delphi Technologies PLC (DLPH): Are Hedge Funds Right About This Stock?

Is Delphi Technologies PLC (NYSE:DLPH) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Delphi Technologies PLC (NYSE:DLPH) an attractive investment now? The smart money is taking a bullish view. The number of long hedge fund positions increased by 1 lately. Our calculations also showed that DLPH isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

GLENVIEW CAPITAL

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the latest hedge fund action surrounding Delphi Technologies PLC (NYSE:DLPH).

How are hedge funds trading Delphi Technologies PLC (NYSE:DLPH)?

At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in DLPH a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

No of Hedge Funds with DLPH Positions

Among these funds, Glenview Capital held the most valuable stake in Delphi Technologies PLC (NYSE:DLPH), which was worth $61.2 million at the end of the second quarter. On the second spot was D E Shaw which amassed $50.7 million worth of shares. Moreover, Citadel Investment Group, Impax Asset Management, and Millennium Management were also bullish on Delphi Technologies PLC (NYSE:DLPH), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Masters Capital Management, managed by Mike Masters, assembled the most valuable position in Delphi Technologies PLC (NYSE:DLPH). Masters Capital Management had $20 million invested in the company at the end of the quarter. Principal Global Investors’s Columbus Circle Investors also initiated a $10.2 million position during the quarter. The other funds with brand new DLPH positions are Robert Polak’s Anchor Bolt Capital, Louis Bacon’s Moore Global Investments, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s check out hedge fund activity in other stocks similar to Delphi Technologies PLC (NYSE:DLPH). These stocks are Matson, Inc. (NYSE:MATX), Callaway Golf Company (NYSE:ELY), Park National Corporation (NYSE:PRK), and Heartland Financial USA Inc (NASDAQ:HTLF). All of these stocks’ market caps resemble DLPH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MATX 8 5690 -1
ELY 20 215556 -6
PRK 8 15051 3
HTLF 8 23414 0
Average 11 64928 -1

View table here if you experience formatting issues.

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 $65 million. That figure was $319 million in DLPH’s case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand Matson, Inc. (NYSE:MATX) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Delphi Technologies PLC (NYSE:DLPH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately DLPH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DLPH were disappointed as the stock returned -33% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.

Disclosure: None. This article was originally published at Insider Monkey.

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