Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Diebold Nixdorf Incorporated (NYSE:DBD) in this article.
Is DBD a good stock to buy now? Diebold Nixdorf Incorporated (NYSE:DBD) investors should be aware of a decrease in support from the world’s most elite money managers lately. Diebold Nixdorf Incorporated (NYSE:DBD) was in 15 hedge funds’ portfolios at the end of September. The all time high for this statistic is 21. There were 16 hedge funds in our database with DBD positions at the end of the second quarter. Our calculations also showed that DBD 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 go over the recent hedge fund action surrounding Diebold Nixdorf Incorporated (NYSE:DBD).
Do Hedge Funds Think DBD Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DBD over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the largest position in Diebold Nixdorf Incorporated (NYSE:DBD). GAMCO Investors has a $32.4 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Miller Value Partners, managed by Bill Miller, which holds a $25.1 million position; 0.9% of its 13F portfolio is allocated to the stock. Other peers that hold long positions consist of Frederick DiSanto’s Ancora Advisors, D. E. Shaw’s D E Shaw and Carl Goldsmith and Scott Klein’s Beach Point Capital Management. In terms of the portfolio weights assigned to each position Beach Point Capital Management allocated the biggest weight to Diebold Nixdorf Incorporated (NYSE:DBD), around 5.15% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, setting aside 0.9 percent of its 13F equity portfolio to DBD.
Due to the fact that Diebold Nixdorf Incorporated (NYSE:DBD) has witnessed a decline in interest from hedge fund managers, we can see that there lies a certain “tier” of funds that slashed their full holdings heading into Q4. At the top of the heap, John Overdeck and David Siegel’s Two Sigma Advisors dumped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, worth about $0.3 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dropped about $0.2 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Diebold Nixdorf Incorporated (NYSE:DBD) but similarly valued. We will take a look at Hawaiian Holdings, Inc. (NASDAQ:HA), Golar LNG Limited (NASDAQ:GLNG), Seacor Holdings, Inc. (NYSE:CKH), Republic Bancorp, Inc. (NASDAQ:RBCAA), Groupon Inc (NASDAQ:GRPN), SpartanNash Company (NASDAQ:SPTN), and Ambac Financial Group, Inc. (NYSE:AMBC). This group of stocks’ market valuations resemble DBD’s market valuation.
|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 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $125 million in DBD’s case. Golar LNG Limited (NASDAQ:GLNG) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. (NASDAQ:RBCAA) is the least popular one with only 4 bullish hedge fund positions. Diebold Nixdorf Incorporated (NYSE:DBD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DBD is 56. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on DBD as the stock returned 40.1% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.