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Here’s What Hedge Funds Think About Dycom Industries, Inc. (DY)

The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Dycom Industries, Inc. (NYSE:DY) based on those filings.

Is Dycom Industries, Inc. (NYSE:DY) a buy here? Investors who are in the know are turning less bullish. The number of long hedge fund positions retreated by 5 lately. Our calculations also showed that DY isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

We’re going to view the fresh hedge fund action encompassing Dycom Industries, Inc. (NYSE:DY).

Hedge fund activity in Dycom Industries, Inc. (NYSE:DY)

Heading into the first quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DY over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

DY_apr2019

More specifically, ACK Asset Management was the largest shareholder of Dycom Industries, Inc. (NYSE:DY), with a stake worth $26.4 million reported as of the end of December. Trailing ACK Asset Management was Renaissance Technologies, which amassed a stake valued at $14.1 million. 12th Street Asset Management, Lonestar Capital Management, and 1060 Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Seeing as Dycom Industries, Inc. (NYSE:DY) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of fund managers who sold off their positions entirely last quarter. Intriguingly, Paul Reeder and Edward Shapiro’s PAR Capital Management said goodbye to the largest stake of all the hedgies watched by Insider Monkey, worth close to $100.1 million in stock. Seth Wunder’s fund, Black-and-White Capital, also said goodbye to its stock, about $14.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 5 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Dycom Industries, Inc. (NYSE:DY) but similarly valued. These stocks are KB Home (NYSE:KBH), Carpenter Technology Corporation (NYSE:CRS), Hilltop Holdings Inc. (NYSE:HTH), and LCI Industries (NYSE:LCII). All of these stocks’ market caps match DY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KBH 14 274581 -3
CRS 15 87982 1
HTH 14 103124 0
LCII 8 79865 -4
Average 12.75 136388 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $136 million. That figure was $126 million in DY’s case. Carpenter Technology Corporation (NYSE:CRS) is the most popular stock in this table. On the other hand LCI Industries (NYSE:LCII) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Dycom Industries, Inc. (NYSE:DY) is more popular among hedge funds. 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. Unfortunately DY wasn’t nearly as popular as these 15 stock and hedge funds that were betting on DY were disappointed as the stock returned -11.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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