After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Delta Apparel, Inc. (NYSE:DLA).
Is DLA a good stock to buy now? Delta Apparel, Inc. (NYSE:DLA) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. DLA shareholders have witnessed an increase in enthusiasm from smart money lately. There were 7 hedge funds in our database with DLA positions at the end of the second quarter. Our calculations also showed that DLA 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.
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 we’re going to view the fresh hedge fund action encompassing Delta Apparel, Inc. (NYSE:DLA).
What have hedge funds been doing with Delta Apparel, Inc. (NYSE:DLA)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in DLA 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 adding to their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Jordan Moelis and Jeff Farroni’s Deep Field Asset Management has the biggest position in Delta Apparel, Inc. (NYSE:DLA), worth close to $4.8 million, comprising 3% of its total 13F portfolio. Coming in second is Renaissance Technologies, which holds a $0.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Frederick DiSanto’s Ancora Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Deep Field Asset Management allocated the biggest weight to Delta Apparel, Inc. (NYSE:DLA), around 3.02% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, dishing out 0.24 percent of its 13F equity portfolio to DLA.
Consequently, key money managers have jumped into Delta Apparel, Inc. (NYSE:DLA) headfirst. Diametric Capital, managed by Nick Thakore, assembled the most outsized position in Delta Apparel, Inc. (NYSE:DLA). Diametric Capital had $0.3 million invested in the company at the end of the quarter. Thomas Bailard’s Bailard Inc also initiated a $0.2 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Delta Apparel, Inc. (NYSE:DLA). These stocks are Chembio Diagnostics Inc (NASDAQ:CEMI), Goodrich Petroleum Corporation (NYSE:GDP), Blue Apron Holdings, Inc. (NYSE:APRN), Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE), Bellerophon Therapeutics, Inc. (NASDAQ:BLPH), CVR Partners LP (NYSE:UAN), and O2Micro International Limited (NASDAQ:OIIM). This group of stocks’ market values are similar to DLA’s market value.
|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 4.3 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $7 million in DLA’s case. Blue Apron Holdings, Inc. (NYSE:APRN) is the most popular stock in this table. On the other hand CVR Partners LP (NYSE:UAN) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Delta Apparel, Inc. (NYSE:DLA) is more popular among hedge funds. Our overall hedge fund sentiment score for DLA is 86. 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 returned 31.6% in 2020 through December 2nd but still managed to beat the market by 16 percentage points. Hedge funds were also right about betting on DLA as the stock returned 49.4% since the end of September (through 12/2) 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.
Disclosure: None. This article was originally published at Insider Monkey.