Is DRTT A Good Stock To Buy Now?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is DRTT a good stock to buy now? Money managers were becoming less confident. The number of long hedge fund bets decreased by 1 lately. DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT) was in 8 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. Our calculations also showed that DRTT 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 formulas investors employ to analyze publicly traded companies. Some of the less known formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best fund managers can beat their index-focused peers by a solid amount (see the details here).


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 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. Now we’re going to go over the key hedge fund action regarding DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT).

What have hedge funds been doing with DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT)?

At the end of September, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DRTT over the last 21 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, MAK Capital One, managed by Michael Kaufman, holds the number one position in DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT). MAK Capital One has a $13.1 million position in the stock, comprising 5.5% of its 13F portfolio. Sitting at the No. 2 spot is 683 Capital Partners, managed by Ari Zweiman, which holds a $11 million position; 0.8% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish comprise Chuck Royce’s Royce & Associates, John Overdeck and David Siegel’s Two Sigma Advisors and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position MAK Capital One allocated the biggest weight to DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT), around 5.51% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, setting aside 0.81 percent of its 13F equity portfolio to DRTT.

Since DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT) has faced a decline in interest from hedge fund managers, logic holds that there was a specific group of money managers that slashed their full holdings last quarter. Intriguingly, Gregg J. Powers’s Private Capital Management cut the biggest investment of all the hedgies followed by Insider Monkey, valued at about $3.3 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $0 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT). We will take a look at GSI Technology, Inc. (NASDAQ:GSIT), Nano Dimension Ltd. (NASDAQ:NNDM), Bel Fuse, Inc. (NASDAQ:BELFB), Radcom Ltd. (NASDAQ:RDCM), Evolus, Inc. (NASDAQ:EOLS), Actinium Pharmaceuticals Inc (NYSE:ATNM), and Minerva Neurosciences, Inc (NASDAQ:NERV). All of these stocks’ market caps match DRTT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GSIT 4 12757 -1
NNDM 2 172 1
BELFB 7 11262 -1
RDCM 4 9676 0
EOLS 10 2356 1
ATNM 6 10618 -1
NERV 15 11835 1
Average 6.9 8382 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $25 million in DRTT’s case. Minerva Neurosciences, Inc (NASDAQ:NERV) is the most popular stock in this table. On the other hand Nano Dimension Ltd. (NASDAQ:NNDM) is the least popular one with only 2 bullish hedge fund positions. DIRTT Environmental Solutions Ltd. (NASDAQ:DRTT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DRTT is 47.1. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on DRTT as the stock returned 20.9% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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