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Dillard’s (DDS) Has Fallen 51% in Last One Year, Underperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of Greenlight Capital’s top stock picks. Greenlight Capital, an investment management firm, is bullish on Dillard’s Inc. (NYSE:DDS) stock. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Dillard’s Inc. (NYSE:DDS) stock. Dillard’s Inc. (NYSE:DDS) is a department store chain.

On July 25, 2019, Greenlight Capital had released its Q2 2019 investor letter. Dillard’s Inc. (NYSE:DDS) stock has posted a return of -51.5% in the trailing one year period, underperforming the S&P 500 Index which returned 12.6% in the same period. This suggests that the investment firm was wrong in its decision. On a year-to-date basis, Dillard’s Inc. (NYSE:DDS) stock has fallen by 56.4%.

In Q2 2019 investor letter, Greenlight Capital said the fund posted a return of 5.8% in the second quarter of 2019, outperforming the S&P 500 Index which returned 4.30% in the same period. Let’s take a look at comments made by Greenlight Capital about Dillard’s Inc. (NYSE:DDS) stock in the Q2 2019 investor letter.

“We re-initiated a position in DDS during the quarter. DDS is a regional department store that owns 90% of its store square footage, with low leverage and strong liquidity. In an environment in which many retailers are going out of business, DDS has delivered positive comparable store sales for the last six quarters, with 7.5% retail EBITDA margins.DDS doesn’t hold quarterly earnings calls or publish periodic investor presentations like most public companies do. Instead, the company has quietly reduced its share count from 80.1 million in 2006 to an estimated 25.3 million currently, and it intends to continue repurchasing shares. Excluding shares owned by the Dillard family, employees and index funds, we estimate the effective float is 6 million shares. Given the reported short interest of 8.3 million shares, we think an interesting trading dynamic could emerge. To the extent that DDS’s prospects as a retailer end up being more challenging than we expect, our entry price of $59.20 creates the real estate at $27 per owned square foot, which compares to an average of $285 per owned square foot for Nordstrom, Macy’s, Kohl’s, JCPenney, Simon and Seritage. DDS shares ended the quarter at $62.28.”

In Q1 2020, the number of bullish hedge fund positions on Dillard’s Inc. (NYSE:DDS) stock decreased by about 35% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Dillard’s growth potential. Our calculations showed that Dillard’s Inc. (NYSE:DDS) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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