The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Darling Ingredients Inc. (NYSE:DAR).
Is DAR a good stock to buy now? Darling Ingredients Inc. (NYSE:DAR) has experienced an increase in hedge fund sentiment lately. Darling Ingredients Inc. (NYSE:DAR) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 25 hedge funds in our database with DAR positions at the end of the second quarter. Our calculations also showed that DAR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now let’s view the new hedge fund action regarding Darling Ingredients Inc. (NYSE:DAR).
Do Hedge Funds Think DAR Is A Good Stock To Buy Now?
At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards DAR over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in Darling Ingredients Inc. (NYSE:DAR), which was worth $145.3 million at the end of the third quarter. On the second spot was Ancora Advisors which amassed $68.8 million worth of shares. Fisher Asset Management, Lansdowne Partners, and Arrowstreet Capital 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 Engine Capital allocated the biggest weight to Darling Ingredients Inc. (NYSE:DAR), around 7.75% of its 13F portfolio. Parsifal Capital Management is also relatively very bullish on the stock, earmarking 4.95 percent of its 13F equity portfolio to DAR.
Now, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, created the biggest position in Darling Ingredients Inc. (NYSE:DAR). Balyasny Asset Management had $24.5 million invested in the company at the end of the quarter. Till Bechtolsheimer’s Arosa Capital Management also initiated a $16.6 million position during the quarter. The other funds with new positions in the stock are Jonathan Barrett and Paul Segal’s Luminus Management, Ray Dalio’s Bridgewater Associates, and Philip Hempleman’s Ardsley Partners.
Let’s now take a look at hedge fund activity in other stocks similar to Darling Ingredients Inc. (NYSE:DAR). These stocks are Inphi Corporation (NASDAQ:IPHI), Post Holdings Inc (NYSE:POST), Tenaris S.A. (NYSE:TS), Aluminum Corp. of China Limited (NYSE:ACH), Ares Management Corp (NYSE:ARES), Polaris Inc. (NYSE:PII), and Stericycle Inc (NASDAQ:SRCL). This group of stocks’ market caps are closest to DAR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $505 million. That figure was $517 million in DAR’s case. Polaris Inc. (NYSE:PII) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 4 bullish hedge fund positions. Darling Ingredients Inc. (NYSE:DAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DAR is 78.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on DAR as the stock returned 56.3% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.