At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not DuPont de Nemours Inc (NYSE:DD) makes for a good investment right now.
Is DD a good stock to buy now? DuPont de Nemours Inc (NYSE:DD) investors should be aware of a decrease in enthusiasm from smart money in recent months. DuPont de Nemours Inc (NYSE:DD) was in 61 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 82. Our calculations also showed that DD 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy 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 review the recent hedge fund action encompassing DuPont de Nemours Inc (NYSE:DD).
How are hedge funds trading DuPont de Nemours Inc (NYSE:DD)?
Heading into the fourth quarter of 2020, a total of 61 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the second quarter of 2020. By comparison, 52 hedge funds held shares or bullish call options in DD a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, 40 North Management was the largest shareholder of DuPont de Nemours Inc (NYSE:DD), with a stake worth $1124.3 million reported as of the end of September. Trailing 40 North Management was D E Shaw, which amassed a stake valued at $462.8 million. Maverick Capital, Citadel Investment Group, and Eminence 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 40 North Management allocated the biggest weight to DuPont de Nemours Inc (NYSE:DD), around 45.2% of its 13F portfolio. Sessa Capital is also relatively very bullish on the stock, designating 13.67 percent of its 13F equity portfolio to DD.
Judging by the fact that DuPont de Nemours Inc (NYSE:DD) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedge funds who sold off their full holdings in the third quarter. It’s worth mentioning that Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners said goodbye to the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $79.7 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also dumped its stock, about $21.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as DuPont de Nemours Inc (NYSE:DD) but similarly valued. These stocks are Baxter International Inc. (NYSE:BAX), National Grid plc (NYSE:NGG), American Electric Power Company, Inc. (NYSE:AEP), Rocket Companies, Inc. (NYSE:RKT), UBS Group AG (NYSE:UBS), DocuSign, Inc. (NASDAQ:DOCU), and General Dynamics Corporation (NYSE:GD). This group of stocks’ market values match DD’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1751 million. That figure was $3679 million in DD’s case. DocuSign, Inc. (NASDAQ:DOCU) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 6 bullish hedge fund positions. DuPont de Nemours Inc (NYSE:DD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DD is 73.4. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on DD as the stock returned 15.8% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.