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Is Diebold Nixdorf Incorporated (DBD) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Diebold Nixdorf Incorporated (NYSE:DBD).

Diebold Nixdorf Incorporated (NYSE:DBD) was in 17 hedge funds’ portfolios at the end of March. DBD investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. There were 21 hedge funds in our database with DBD positions at the end of the previous quarter. Our calculations also showed that DBD isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

To the average investor there are several gauges stock market investors use to evaluate stocks. A pair of the most innovative gauges are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the best investment managers can outpace the broader indices by a superb margin (see the details here).

Bill Miller

Bill Miller of Miller Value Partners

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s go over the new hedge fund action surrounding Diebold Nixdorf Incorporated (NYSE:DBD).

What have hedge funds been doing with Diebold Nixdorf Incorporated (NYSE:DBD)?

Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in DBD a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, GAMCO Investors was the largest shareholder of Diebold Nixdorf Incorporated (NYSE:DBD), with a stake worth $18.3 million reported as of the end of September. Trailing GAMCO Investors was Ancora Advisors, which amassed a stake valued at $11.2 million. Miller Value Partners, D E Shaw, and Brigade 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 Prescott Group Capital Management allocated the biggest weight to Diebold Nixdorf Incorporated (NYSE:DBD), around 0.93% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, dishing out 0.66 percent of its 13F equity portfolio to DBD.

Judging by the fact that Diebold Nixdorf Incorporated (NYSE:DBD) has witnessed bearish sentiment from the smart money, it’s safe to say that there is a sect of hedge funds that slashed their positions entirely in the first quarter. At the top of the heap, Derek C. Schrier’s Indaba Capital Management dropped the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $10.5 million in stock, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors was right behind this move, as the fund sold off about $0.4 million worth. These transactions are important to note, as total hedge fund interest was cut by 4 funds in the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Diebold Nixdorf Incorporated (NYSE:DBD) but similarly valued. We will take a look at Golden Star Resources Ltd. (NYSE:GSS), Movado Group, Inc (NYSE:MOV), SCVX Corp. (NYSE:SCVX), and Vishay Precision Group Inc (NYSE:VPG). This group of stocks’ market valuations resemble DBD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GSS 6 8515 3
MOV 13 13616 1
SCVX 14 84898 14
VPG 15 90910 -2
Average 12 49485 4

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $59 million in DBD’s case. Vishay Precision Group Inc (NYSE:VPG) is the most popular stock in this table. On the other hand Golden Star Resources Ltd. (NYSE:GSS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Diebold Nixdorf Incorporated (NYSE:DBD) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on DBD as the stock returned 78.7% so far in Q2 (through June 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.