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Did Hedge Funds Drop The Ball On DMC Global Inc. (BOOM)?

How do we determine whether DMC Global Inc. (NASDAQ:BOOM) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

Is DMC Global Inc. (NASDAQ:BOOM) a buy here? Hedge funds are getting less optimistic. The number of long hedge fund positions went down by 4 recently. Our calculations also showed that BOOM isn’t among the 30 most popular stocks among hedge funds.

In today’s marketplace there are tons of indicators stock market investors employ to assess their stock investments. Two of the most useful indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform the broader indices by a solid margin (see the details here).

RENAISSANCE TECHNOLOGIES

Let’s take a look at the latest hedge fund action encompassing DMC Global Inc. (NASDAQ:BOOM).

Hedge fund activity in DMC Global Inc. (NASDAQ:BOOM)

At Q4’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BOOM over the last 14 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

BOOM_may2019

Among these funds, Encompass Capital Advisors held the most valuable stake in DMC Global Inc. (NASDAQ:BOOM), which was worth $20.4 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $14.2 million worth of shares. Moreover, Lyon Street Capital, Manatuck Hill Partners, and Nokomis Capital were also bullish on DMC Global Inc. (NASDAQ:BOOM), allocating a large percentage of their portfolios to this stock.

Due to the fact that DMC Global Inc. (NASDAQ:BOOM) has witnessed falling interest from the smart money, it’s safe to say that there exists a select few funds that decided to sell off their full holdings last quarter. At the top of the heap, Chuck Royce’s Royce & Associates said goodbye to the largest position of all the hedgies followed by Insider Monkey, worth an estimated $6 million in stock. George McCabe’s fund, Portolan Capital Management, also said goodbye to its stock, about $3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to DMC Global Inc. (NASDAQ:BOOM). We will take a look at OneSpan Inc. (NASDAQ:OSPN), Independence Holding Company (NYSE:IHC), Niu Technologies (NASDAQ:NIU), and Gladstone Commercial Corporation (NASDAQ:GOOD). All of these stocks’ market caps match BOOM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OSPN 12 57897 0
IHC 3 14499 -1
NIU 3 21884 3
GOOD 7 52227 1
Average 6.25 36627 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $59 million in BOOM’s case. OneSpan Inc. (NASDAQ:OSPN) is the most popular stock in this table. On the other hand Independence Holding Company (NYSE:IHC) is the least popular one with only 3 bullish hedge fund positions. DMC Global Inc. (NASDAQ:BOOM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on BOOM as the stock returned 93.4% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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