Hedge Funds Are Nibbling On DHT Holdings Inc (DHT)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in DHT Holdings Inc (NYSE:DHT)? The smart money sentiment can provide an answer to this question.

DHT Holdings Inc (NYSE:DHT) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. DHT investors should pay attention to an increase in hedge fund interest lately. There were 18 hedge funds in our database with DHT holdings at the end of December. Our calculations also showed that DHT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. Now let’s analyze the recent hedge fund action regarding DHT Holdings Inc (NYSE:DHT).

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

At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DHT over the last 23 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is DHT A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Renaissance Technologies has the largest position in DHT Holdings Inc (NYSE:DHT), worth close to $34.9 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Hosking Partners, managed by Jeremy Hosking, which holds a $21.4 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining peers that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ari Zweiman’s 683 Capital Partners and Michael Gelband’s ExodusPoint Capital. In terms of the portfolio weights assigned to each position Amitell Capital allocated the biggest weight to DHT Holdings Inc (NYSE:DHT), around 3.49% of its 13F portfolio. Birch Grove Capital is also relatively very bullish on the stock, earmarking 0.76 percent of its 13F equity portfolio to DHT.

As aggregate interest increased, some big names have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, assembled the most outsized position in DHT Holdings Inc (NYSE:DHT). ExodusPoint Capital had $5.7 million invested in the company at the end of the quarter. Todd J. Kantor’s Encompass Capital Advisors also made a $3.5 million investment in the stock during the quarter. The following funds were also among the new DHT investors: Israel Englander’s Millennium Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Mark Broach’s Manatuck Hill Partners.

Let’s now review hedge fund activity in other stocks similar to DHT Holdings Inc (NYSE:DHT). These stocks are Kearny Financial Corp. (NASDAQ:KRNY), Customers Bancorp Inc (NYSE:CUBI), Danaos Corporation (NYSE:DAC), Heritage Financial Corporation (NASDAQ:HFWA), Vaxcyte, Inc. (NASDAQ:PCVX), Cerus Corporation (NASDAQ:CERS), and G1 Therapeutics, Inc. (NASDAQ:GTHX). This group of stocks’ market values are closest to DHT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KRNY 17 119727 0
CUBI 15 55455 4
DAC 12 122088 1
HFWA 5 19017 -1
PCVX 10 187033 -2
CERS 15 265595 1
GTHX 12 37716 -4
Average 12.3 115233 -0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $106 million in DHT’s case. Kearny Financial Corp. (NASDAQ:KRNY) is the most popular stock in this table. On the other hand Heritage Financial Corporation (NASDAQ:HFWA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks DHT Holdings Inc (NYSE:DHT) is more popular among hedge funds. Our overall hedge fund sentiment score for DHT is 78.4. 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. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately DHT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DHT were disappointed as the stock returned -1.7% since the end of the first quarter (through 7/16) 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 since 2019.

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