Hedge Funds Are Warming Up To Dell Technologies Inc. (DELL)

Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the nearly unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Dell Technologies Inc. (NYSE:DELL) has seen an increase in hedge fund interest recently. DELL was in 40 hedge funds’ portfolios at the end of the second quarter of 2019. There were 37 hedge funds in our database with DELL positions at the end of the previous quarter. Our calculations also showed that DELL isn’t among the 30 most popular stocks among hedge funds.

If you’d ask most investors, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, We hone in on the bigwigs of this group, about 750 funds. Most estimates calculate that this group of people direct the lion’s share of the smart money’s total capital, and by following their unrivaled equity investments, Insider Monkey has formulated a few investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

Josh Friedman Canyon Capital

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the fresh hedge fund action regarding Dell Technologies Inc. (NYSE:DELL).

Hedge fund activity in Dell Technologies Inc. (NYSE:DELL)

At the end of the second quarter, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the first quarter of 2019. By comparison, 66 hedge funds held shares or bullish call options in DELL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with DELL Positions

More specifically, Elliott Management was the largest shareholder of Dell Technologies Inc. (NYSE:DELL), with a stake worth $653.3 million reported as of the end of March. Trailing Elliott Management was MSD Capital, which amassed a stake valued at $230.6 million. Elliott Management, Canyon Capital Advisors, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, specific money managers have jumped into Dell Technologies Inc. (NYSE:DELL) headfirst. MSD Capital, managed by Glenn Fuhrman and John Phelan, established the biggest position in Dell Technologies Inc. (NYSE:DELL). MSD Capital had $230.6 million invested in the company at the end of the quarter. Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management also made a $126.6 million investment in the stock during the quarter. The other funds with brand new DELL positions are Andre F. Perold’s HighVista Strategies, Robert Emil Zoellner’s Alpine Associates, and Arnaud Ajdler’s Engine Capital.

Let’s now review hedge fund activity in other stocks similar to Dell Technologies Inc. (NYSE:DELL). These stocks are Johnson Controls International plc (NYSE:JCI), BB&T Corporation (NYSE:BBT), Autodesk, Inc. (NASDAQ:ADSK), and The Kraft Heinz Company (NASDAQ:KHC). All of these stocks’ market caps resemble DELL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JCI 18 634680 -7
BBT 23 352478 -7
ADSK 56 3385274 -1
KHC 34 10579951 5
Average 32.75 3738096 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $3738 million. That figure was $1938 million in DELL’s case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand Johnson Controls International plc (NYSE:JCI) is the least popular one with only 18 bullish hedge fund positions. Dell Technologies Inc. (NYSE:DELL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on DELL, though not to the same extent, as the stock returned 2.1% during the third quarter and outperformed the market as well.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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