Is Dell Technologies Inc. (DELL) Going to Burn These Hedge Funds?

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Dell Technologies Inc. (NYSE:DELL) based on that data.

Dell Technologies Inc. (NYSE:DELL) investors should be aware of an increase in enthusiasm from smart money in recent months. Dell Technologies Inc. (NYSE:DELL) was in 62 hedge funds’ portfolios at the end of June. The all time high for this statistic is 86. Our calculations also showed that DELL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s go over the fresh hedge fund action regarding Dell Technologies Inc. (NYSE:DELL).

Do Hedge Funds Think DELL Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 62 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. By comparison, 50 hedge funds held shares or bullish call options in DELL a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

More specifically, Elliott Investment Management was the largest shareholder of Dell Technologies Inc. (NYSE:DELL), with a stake worth $2475.1 million reported as of the end of June. Trailing Elliott Investment Management was Lyrical Asset Management, which amassed a stake valued at $460.9 million. Canyon Capital Advisors, Arrowstreet Capital, and Third Point 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 HighVista Strategies allocated the biggest weight to Dell Technologies Inc. (NYSE:DELL), around 25.13% of its 13F portfolio. Engine Capital is also relatively very bullish on the stock, setting aside 23.06 percent of its 13F equity portfolio to DELL.

As one would reasonably expect, key hedge funds have jumped into Dell Technologies Inc. (NYSE:DELL) headfirst. Antara Capital, managed by Himanshu Gulati, assembled the most outsized call position in Dell Technologies Inc. (NYSE:DELL). Antara Capital had $74.8 million invested in the company at the end of the quarter. Benjamin Pass’s TOMS Capital also made a $61.6 million investment in the stock during the quarter. The following funds were also among the new DELL investors: Amit Nitin Doshi’s Harbor Spring Capital, Dmitry Balyasny’s Balyasny Asset Management, and Himanshu Gulati’s Antara Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Dell Technologies Inc. (NYSE:DELL). These stocks are Duke Energy Corporation (NYSE:DUK), Canadian National Railway Company (NYSE:CNI), Truist Financial Corporation (NYSE:TFC), Activision Blizzard, Inc. (NASDAQ:ATVI), CSX Corporation (NASDAQ:CSX), The Sherwin-Williams Company (NYSE:SHW), and Coupang, Inc. (NYSE:CPNG). This group of stocks’ market caps are similar to DELL’s market cap.

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As you can see these stocks had an average of 47.3 hedge funds with bullish positions and the average amount invested in these stocks was $4978 million. That figure was $5601 million in DELL’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Coupang, Inc. (NYSE:CPNG) is the least popular one with only 33 bullish hedge fund positions. Dell Technologies Inc. (NYSE:DELL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DELL is 63.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Hedge funds were also right about betting on DELL as the stock returned 5.2% since the end of Q2 (through 9/27) 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.