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Is 3D Systems Corporation (DDD) A Good Stock To Buy?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 13.1% in the first 2.5 months of this year (including dividend payments). Conversely, hedge funds’ top 15 large-cap stock picks generated a return of 19.7% during the same 2.5-month period, with 93% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like 3D Systems Corporation (NYSE:DDD).

3D Systems Corporation (NYSE:DDD) shareholders have witnessed a decrease in hedge fund interest of late. Our calculations also showed that ddd isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chuck Royce

Let’s view the key hedge fund action regarding 3D Systems Corporation (NYSE:DDD).

How are hedge funds trading 3D Systems Corporation (NYSE:DDD)?

Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DDD 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.

No of Hedge Funds with DDD Positions

According to Insider Monkey’s hedge fund database, D. E. Shaw’s D E Shaw has the largest position in 3D Systems Corporation (NYSE:DDD), worth close to $31.3 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $7.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Daniel S. Och’s OZ Management, and Jim Simons’s Renaissance Technologies.

Since 3D Systems Corporation (NYSE:DDD) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds who were dropping their entire stakes by the end of the third quarter. It’s worth mentioning that Philippe Laffont’s Coatue Management sold off the biggest position of all the hedgies monitored by Insider Monkey, comprising an estimated $18.2 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund said goodbye to about $9.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 3 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to 3D Systems Corporation (NYSE:DDD). We will take a look at Big Lots, Inc. (NYSE:BIG), CorVel Corporation (NASDAQ:CRVL), Huron Consulting Group Inc. (NASDAQ:HURN), and Glu Mobile Inc. (NASDAQ:GLUU). This group of stocks’ market valuations are similar to DDD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BIG 19 137809 0
CRVL 15 112790 4
HURN 13 28589 2
GLUU 20 108209 -2
Average 16.75 96849 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $51 million in DDD’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand Huron Consulting Group Inc. (NASDAQ:HURN) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks 3D Systems Corporation (NYSE:DDD) is even less popular than HURN. Hedge funds dodged a bullet by taking a bearish stance towards DDD. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately DDD wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); DDD investors were disappointed as the stock returned 6.4% 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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