The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at DCT Industrial Trust Inc (NYSE:DCT) from the perspective of those successful funds.
DCT Industrial Trust Inc (NYSE:DCT) has experienced a decrease in activity from the world’s largest hedge funds lately. There were 12 hedge funds in our database with DCT positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as IPG Photonics Corporation (NASDAQ:IPGP), Teradyne, Inc. (NYSE:TER), and Companhia Brasileira de Distrib. (ADR) (NYSE:CBD) to gather more data points.
Follow Dct Industrial Trust Inc. (NYSE:DCT)
Follow Dct Industrial Trust Inc. (NYSE:DCT)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Alexander Raths/Shutterstock.com
With all of this in mind, let’s check out the latest action surrounding DCT Industrial Trust Inc (NYSE:DCT).
What have hedge funds been doing with DCT Industrial Trust Inc (NYSE:DCT)?
Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in DCT heading into this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Millennium Management, one of the 10 largest hedge funds in the world has the largest position in DCT Industrial Trust Inc (NYSE:DCT), worth close to $86.9 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $12.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise Dmitry Balyasny’s Balyasny Asset Management, Matthew Tewksbury’s Stevens Capital Management and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually sold off their positions entirely. Intriguingly, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners sold off the biggest investment of all the hedgies monitored by Insider Monkey, worth close to $3.3 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund sold off about $2.2 million worth of shares.
Let’s go over hedge fund activity in other stocks similar to DCT Industrial Trust Inc (NYSE:DCT). We will take a look at IPG Photonics Corporation (NASDAQ:IPGP), Teradyne, Inc. (NYSE:TER), Companhia Brasileira de Distrib. (ADR) (NYSE:CBD), and Santander Consumer USA Holdings Inc (NYSE:SC). All of these stocks’ market caps are similar to DCT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IPGP | 16 | 143200 | -4 |
| TER | 24 | 348445 | 3 |
| CBD | 6 | 37945 | -1 |
| SC | 28 | 316445 | 1 |
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $114 million in DCT’s case. Santander Consumer USA Holdings Inc (NYSE:SC) is the most popular stock in this table. On the other hand Companhia Brasileira de Distrib. (ADR) (NYSE:CBD) is the least popular one with only 6 bullish hedge fund positions. DCT Industrial Trust Inc (NYSE:DCT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SC might be a better candidate to consider taking a long position in.
