Is DMC Global (BOOM) A Good Stock To Buy Now?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of DMC Global Inc. (NASDAQ:BOOM).

Is DMC Global (BOOM) a good stock to buy now? BOOM was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 22. BOOM has experienced a decrease in support from the world’s most elite money managers in recent months. There were 9 hedge funds in our database with BOOM holdings at the end of June. Our calculations also showed that BOOM 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 a lot of metrics investors put to use to grade publicly traded companies. A couple of the most underrated metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top money managers can outclass the broader indices by a very impressive margin (see the details here).

Ken Griffin

Ken Griffin of Citadel Investment Group

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 go over the fresh hedge fund action encompassing DMC Global Inc. (NASDAQ:BOOM).

How are hedge funds trading DMC Global Inc. (NASDAQ:BOOM)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BOOM over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BOOM A Good Stock To Buy?

The largest stake in DMC Global Inc. (NASDAQ:BOOM) was held by Rutabaga Capital Management, which reported holding $3.5 million worth of stock at the end of September. It was followed by Winton Capital Management with a $3.1 million position. Other investors bullish on the company included Citadel Investment Group, Citadel Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to DMC Global Inc. (NASDAQ:BOOM), around 1.97% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.1 percent of its 13F equity portfolio to BOOM.

Due to the fact that DMC Global Inc. (NASDAQ:BOOM) has faced falling interest from the smart money, logic holds that there is a sect of hedgies that elected to cut their full holdings last quarter. Intriguingly, Vince Maddi and Shawn Brennan’s SIR Capital Management dumped the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $0.7 million in stock, and Renaissance Technologies was right behind this move, as the fund cut about $0.6 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as DMC Global Inc. (NASDAQ:BOOM) but similarly valued. We will take a look at Northfield Bancorp Inc (NASDAQ:NFBK), US Concrete Inc (NASDAQ:USCR), Homology Medicines, Inc. (NASDAQ:FIXX), CAI International Inc (NYSE:CAI), Plantronics, Inc. (NYSE:PLT), Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX), and MagnaChip Semiconductor Corporation (NYSE:MX). This group of stocks’ market valuations resemble BOOM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NFBK 8 28193 1
USCR 9 25583 0
FIXX 11 18591 -5
CAI 10 118924 1
PLT 14 20398 4
BLX 2 9318 -1
MX 27 252487 2
Average 11.6 67642 0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $8 million in BOOM’s case. MagnaChip Semiconductor Corporation (NYSE:MX) is the most popular stock in this table. On the other hand Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX) is the least popular one with only 2 bullish hedge fund positions. DMC Global Inc. (NASDAQ:BOOM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BOOM is 18.2. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on BOOM as the stock returned 27.2% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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