In this article we will check out the progression of hedge fund sentiment towards 3D Systems Corporation (NYSE:DDD) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is DDD a good stock to buy now? The best stock pickers were turning less bullish. The number of long hedge fund positions retreated by 3 in recent months. 3D Systems Corporation (NYSE:DDD) was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 19. Our calculations also showed that DDD 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). There were 18 hedge funds in our database with DDD holdings at the end of June.
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 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 take a peek at the fresh hedge fund action encompassing 3D Systems Corporation (NYSE:DDD).
Do Hedge Funds Think DDD Is A Good Stock To Buy Now?
At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in DDD a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, D E Shaw was the largest shareholder of 3D Systems Corporation (NYSE:DDD), with a stake worth $11.4 million reported as of the end of September. Trailing D E Shaw was Coatue Management, which amassed a stake valued at $4.7 million. Royce & Associates, Citadel Investment Group, and Millennium Management 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 Quantinno Capital allocated the biggest weight to 3D Systems Corporation (NYSE:DDD), around 0.33% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, setting aside 0.09 percent of its 13F equity portfolio to DDD.
Due to the fact that 3D Systems Corporation (NYSE:DDD) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds who sold off their entire stakes heading into Q4. It’s worth mentioning that Renaissance Technologies dropped the largest stake of the 750 funds followed by Insider Monkey, comprising close to $3.9 million in stock. Peter Muller’s fund, PDT Partners, also said goodbye to its stock, about $0.5 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as 3D Systems Corporation (NYSE:DDD) but similarly valued. We will take a look at Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), Diebold Nixdorf Incorporated (NYSE:DBD), Hawaiian Holdings, Inc. (NASDAQ:HA), Golar LNG Limited (NASDAQ:GLNG), Seacor Holdings, Inc. (NYSE:CKH), Republic Bancorp, Inc. KY (NASDAQ:RBCAA), and Groupon Inc (NASDAQ:GRPN). All of these stocks’ market caps are similar to DDD’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 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $33 million in DDD’s case. Golar LNG Limited (NASDAQ:GLNG) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. KY (NASDAQ:RBCAA) is the least popular one with only 4 bullish hedge fund positions. 3D Systems Corporation (NYSE:DDD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DDD is 56.2. 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 DDD as the stock returned 111% 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.