Hedge Funds Are Nibbling On Ault Global Holdings, Inc. (DPW)

In this article we will take a look at whether hedge funds think Ault Global Holdings, Inc. (NYSE:DPW) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is Ault Global Holdings, Inc. (NYSE:DPW) undervalued? Investors who are in the know were in a bullish mood. The number of long hedge fund positions went up by 2 lately. Ault Global Holdings, Inc. (NYSE:DPW) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 2. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DPW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to view the key hedge fund action encompassing Ault Global Holdings, Inc. (NYSE:DPW).

Do Hedge Funds Think DPW Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 200% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in DPW a year ago. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

More specifically, Citadel Investment Group was the largest shareholder of Ault Global Holdings, Inc. (NYSE:DPW), with a stake worth $1.6 million reported as of the end of March. Trailing Citadel Investment Group was Citadel Investment Group, which amassed a stake valued at $0.4 million. Engineers Gate Manager was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Engineers Gate Manager allocated the biggest weight to Ault Global Holdings, Inc. (NYSE:DPW), around 0.02% of its 13F portfolio. Citadel Investment Group is also relatively very bullish on the stock, earmarking 0.0004 percent of its 13F equity portfolio to DPW.

Consequently, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in Ault Global Holdings, Inc. (NYSE:DPW). Citadel Investment Group had $1.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.4 million investment in the stock during the quarter. The other funds with brand new DPW positions are Greg Eisner’s Engineers Gate Manager, Matthew Hulsizer’s PEAK6 Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks similar to Ault Global Holdings, Inc. (NYSE:DPW). These stocks are Electromed, Inc. (NYSE:ELMD), FAT Brands Inc. (NASDAQ:FAT), Entera Bio Ltd. (NASDAQ:ENTX), Baudax Bio, Inc. (NASDAQ:BXRX), ARC Document Solutions Inc (NYSE:ARC), Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP), and Research Frontiers, Inc. (NASDAQ:REFR). This group of stocks’ market values match DPW’s market value.

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As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $2 million in DPW’s case. ARC Document Solutions Inc (NYSE:ARC) is the most popular stock in this table. On the other hand Entera Bio Ltd. (NASDAQ:ENTX) is the least popular one with only 2 bullish hedge fund positions. Ault Global Holdings, Inc. (NYSE:DPW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DPW is 49.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately DPW wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DPW investors were disappointed as the stock returned -7.9% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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