In this article we will check out the progression of hedge fund sentiment towards Denbury Inc. (NYSE:DEN) 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 DEN a good stock to buy now? Investors who are in the know were in a bullish mood. The number of bullish hedge fund positions moved up by 9 in recent months. Denbury Inc. (NYSE:DEN) was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that DEN 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.
Today there are dozens of metrics investors put to use to evaluate their stock investments. A duo of the most underrated metrics are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top money managers can trounce the S&P 500 by a solid margin (see the details here).
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. With all of this in mind we’re going to take a look at the new hedge fund action regarding Denbury Inc. (NYSE:DEN).
Do Hedge Funds Think DEN Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9 from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards DEN over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Steven Tananbaum’s GoldenTree Asset Management has the most valuable position in Denbury Inc. (NYSE:DEN), worth close to $134.3 million, amounting to 11.9% of its total 13F portfolio. On GoldenTree Asset Management’s heels is Cyrus Capital Partners, managed by Stephen C. Freidheim, which holds a $67.8 million position; the fund has 15.8% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain Brian J. Higgins’s King Street Capital, Robert Henry Lynch’s Aristeia Capital and Todd J. Kantor’s Encompass Capital Advisors. In terms of the portfolio weights assigned to each position Cyrus Capital Partners allocated the biggest weight to Denbury Inc. (NYSE:DEN), around 15.83% of its 13F portfolio. GoldenTree Asset Management is also relatively very bullish on the stock, setting aside 11.85 percent of its 13F equity portfolio to DEN.
As one would reasonably expect, some big names have jumped into Denbury Inc. (NYSE:DEN) headfirst. GoldenTree Asset Management, managed by Steven Tananbaum, created the most outsized position in Denbury Inc. (NYSE:DEN). GoldenTree Asset Management had $134.3 million invested in the company at the end of the quarter. Stephen C. Freidheim’s Cyrus Capital Partners also initiated a $67.8 million position during the quarter. The following funds were also among the new DEN investors: Brian J. Higgins’s King Street Capital, Robert Henry Lynch’s Aristeia Capital, and Todd J. Kantor’s Encompass Capital Advisors.
Let’s now take a look at hedge fund activity in other stocks similar to Denbury Inc. (NYSE:DEN). These stocks are Warrior Met Coal Inc. (NYSE:HCC), CEVA, Inc. (NASDAQ:CEVA), Welbilt, Inc. (NYSE:WBT), OraSure Technologies, Inc. (NASDAQ:OSUR), Carpenter Technology Corporation (NYSE:CRS), Primoris Services Corp (NASDAQ:PRIM), and Qiwi PLC (NASDAQ:QIWI). All of these stocks’ market caps are similar to DEN’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 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $298 million in DEN’s case. Warrior Met Coal Inc. (NYSE:HCC) is the most popular stock in this table. On the other hand Qiwi PLC (NASDAQ:QIWI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Denbury Inc. (NYSE:DEN) is even less popular than QIWI. Our overall hedge fund sentiment score for DEN is 10. 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. Hedge funds clearly dropped the ball on DEN as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on DEN as the stock returned 42% since Q3 (through December 8th) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.