In this article you are going to find out whether hedge funds think Danimer Scientific, Inc. (NYSE:DNMR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Danimer Scientific, Inc. (NYSE:DNMR) a buy here? The best stock pickers were becoming less hopeful. The number of bullish hedge fund bets were cut by 9 recently. Danimer Scientific, Inc. (NYSE:DNMR) was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that DNMR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to review the new hedge fund action encompassing Danimer Scientific, Inc. (NYSE:DNMR).
Do Hedge Funds Think DNMR Is A Good Stock To Buy Now?
At third quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in DNMR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Greenlight Capital held the most valuable stake in Danimer Scientific, Inc. (NYSE:DNMR), which was worth $38.5 million at the end of the third quarter. On the second spot was Chescapmanager LLC which amassed $20.1 million worth of shares. Heathbridge Capital Management, Marshall Wace LLP, and Encompass Capital Advisors were 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 Heathbridge Capital Management allocated the biggest weight to Danimer Scientific, Inc. (NYSE:DNMR), around 5.52% of its 13F portfolio. Chescapmanager LLC is also relatively very bullish on the stock, earmarking 3 percent of its 13F equity portfolio to DNMR.
Judging by the fact that Danimer Scientific, Inc. (NYSE:DNMR) has experienced declining sentiment from hedge fund managers, we can see that there was a specific group of money managers that elected to cut their entire stakes by the end of the third quarter. Interestingly, Michel Massoud’s Melqart Asset Management dropped the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising close to $23.9 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund dumped about $19.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 9 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Danimer Scientific, Inc. (NYSE:DNMR) but similarly valued. These stocks are Ecovyst Inc. (NYSE:ECVT), Capitol Federal Financial, Inc. (NASDAQ:CFFN), Latch Inc. (NASDAQ:LTCH), Global Blood Therapeutics Inc (NASDAQ:GBT), Vocera Communications Inc (NYSE:VCRA), Coeur Mining, Inc. (NYSE:CDE), and Axcelis Technologies Inc (NASDAQ:ACLS). This group of stocks’ market caps match DNMR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ECVT | 7 | 73564 | -4 |
| CFFN | 11 | 68921 | -3 |
| LTCH | 15 | 193954 | 15 |
| GBT | 23 | 382922 | 7 |
| VCRA | 17 | 161476 | -3 |
| CDE | 12 | 35611 | -7 |
| ACLS | 22 | 223978 | 3 |
| Average | 15.3 | 162918 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.3 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $153 million in DNMR’s case. Global Blood Therapeutics Inc (NASDAQ:GBT) is the most popular stock in this table. On the other hand Ecovyst Inc. (NYSE:ECVT) is the least popular one with only 7 bullish hedge fund positions. Danimer Scientific, Inc. (NYSE:DNMR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DNMR is 60.8. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately DNMR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DNMR were disappointed as the stock returned -47.9% since the end of September (through 12/31) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
