In this article we will take a look at whether hedge funds think Diamond Hill Investment Group, Inc. (NASDAQ:DHIL) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is DHIL a good stock to buy now? Diamond Hill Investment Group, Inc. (NASDAQ:DHIL) has seen a decrease in hedge fund interest of late. Diamond Hill Investment Group, Inc. (NASDAQ:DHIL) was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. There were 10 hedge funds in our database with DHIL holdings at the end of June. Our calculations also showed that DHIL 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.
In the financial world there are numerous signals shareholders can use to evaluate their stock investments. A couple of the best signals are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can trounce the broader indices 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. Keeping this in mind let’s take a look at the key hedge fund action regarding Diamond Hill Investment Group, Inc. (NASDAQ:DHIL).
Do Hedge Funds Think DHIL Is A Good Stock To Buy Now?
At the end of September, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DHIL over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the largest position in Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), worth close to $17.7 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $12.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism include Ali Motamed’s Invenomic Capital Management, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), around 2.24% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to DHIL.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Zebra Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified DHIL as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Diamond Hill Investment Group, Inc. (NASDAQ:DHIL) but similarly valued. These stocks are BeyondSpring, Inc. (NASDAQ:BYSI), Sierra Wireless, Inc. (NASDAQ:SWIR), Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), Organogenesis Holdings Inc. (NASDAQ:ORGO), Rubius Therapeutics, Inc. (NASDAQ:RUBY), Syros Pharmaceuticals, Inc. (NASDAQ:SYRS), and Brightcove Inc (NASDAQ:BCOV). All of these stocks’ market caps are similar to DHIL’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 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $43 million in DHIL’s case. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is the most popular stock in this table. On the other hand Organogenesis Holdings Inc. (NASDAQ:ORGO) is the least popular one with only 2 bullish hedge fund positions. Diamond Hill Investment Group, Inc. (NASDAQ:DHIL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DHIL is 39.3. 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 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 DHIL as the stock returned 27.9% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.