It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Destination Maternity Corp (NASDAQ:DEST) .
Is Destination Maternity Corp (NASDAQ:DEST) a first-rate stock to buy now? Hedge funds are indeed betting on the stock. The number of long hedge fund bets that are revealed through the 13F filings rose by 1 lately. DEST was in 7 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with DEST positions at the end of the previous quarter. At the end of this article we will also compare DEST to other stocks including Digirad Corporation (NASDAQ:DRAD), Hydra Industries Acquisition Corp. (NASDAQ:HDRA), and Kindred Biosciences Inc (NASDAQ:KIN) to get a better sense of its popularity.
Follow Destination Maternity Corp (NASDAQ:DEST)
Follow Destination Maternity Corp (NASDAQ:DEST)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
With all of this in mind, we’re going to review the fresh action encompassing Destination Maternity Corp (NASDAQ:DEST).
What does the smart money think about Destination Maternity Corp (NASDAQ:DEST)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, growth of 17% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards DEST over the last 5 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in Destination Maternity Corp (NASDAQ:DEST), worth close to $7.5 million. On Royce & Associates’s heels is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $6.1 million position. Other members of the smart money with similar optimism include J. Daniel Plants’ Voce Capital, George McCabe’s Portolan Capital Management and Mark N. Diker’s Diker Management. We should note that Diker Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, specific money managers were breaking ground themselves. Portolan Capital Management initiated the most valuable position in Destination Maternity Corp (NASDAQ:DEST). Portolan Capital Management had $2.3 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also made a $0 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks similar to Destination Maternity Corp (NASDAQ:DEST). These stocks are Digirad Corporation (NASDAQ:DRAD), Hydra Industries Acquisition Corp. (NASDAQ:HDRA), Kindred Biosciences Inc (NASDAQ:KIN), and American Superconductor Corporation (NASDAQ:AMSC). This group of stocks’ market values are similar to DEST’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $19 million in DEST’s case. Digirad Corporation (NASDAQ:DRAD) is the most popular stock in this table. On the other hand Hydra Industries Acquisition Corp. (NASDAQ:HDRA) is the least popular one with only 5 bullish hedge fund positions. Destination Maternity Corp (NASDAQ:DEST) 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 DRAD might be a better candidate to consider taking a long position in.