In this article we will take a look at whether hedge funds think DuPont de Nemours Inc (NYSE:DD) 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.
DuPont de Nemours Inc (NYSE:DD) investors should pay attention to a decrease in enthusiasm from smart money recently. DuPont de Nemours Inc (NYSE:DD) was in 51 hedge funds’ portfolios at the end of September. The all time high for this statistic is 82. There were 57 hedge funds in our database with DD positions at the end of the second quarter. Our calculations also showed that DD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s review the fresh hedge fund action surrounding DuPont de Nemours Inc (NYSE:DD).
David S. Winter of 40 North Management
Do Hedge Funds Think DD Is A Good Stock To Buy Now?
At Q3’s end, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the second quarter of 2021. On the other hand, there were a total of 61 hedge funds with a bullish position in DD a year ago. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, 40 North Management was the largest shareholder of DuPont de Nemours Inc (NYSE:DD), with a stake worth $331.5 million reported as of the end of September. Trailing 40 North Management was Third Point, which amassed a stake valued at $202.3 million. Arrowstreet Capital, D E Shaw, and Glenview 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 SAYA Management allocated the biggest weight to DuPont de Nemours Inc (NYSE:DD), around 14.21% of its 13F portfolio. 40 North Management is also relatively very bullish on the stock, dishing out 10.21 percent of its 13F equity portfolio to DD.
Since DuPont de Nemours Inc (NYSE:DD) has experienced falling interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds that elected to cut their positions entirely by the end of the third quarter. Interestingly, Michael Cowley’s Sandbar Asset Management cut the biggest position of all the hedgies monitored by Insider Monkey, valued at an estimated $15.7 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund said goodbye to about $9.4 million worth. These transactions are interesting, as total hedge fund interest dropped by 6 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as DuPont de Nemours Inc (NYSE:DD) but similarly valued. We will take a look at KKR & Co Inc. (NYSE:KKR), Otis Worldwide Corporation (NYSE:OTIS), AFLAC Incorporated (NYSE:AFL), The Hershey Company (NYSE:HSY), NatWest Group plc (NYSE:NWG), Welltower Inc. (NYSE:WELL), and TransDigm Group Incorporated (NYSE:TDG). This group of stocks’ market valuations are similar to DD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KKR | 56 | 4652455 | 2 |
| OTIS | 46 | 2206787 | 1 |
| AFL | 34 | 223946 | 1 |
| HSY | 33 | 1274071 | -5 |
| NWG | 7 | 8068 | 2 |
| WELL | 22 | 508861 | 3 |
| TDG | 63 | 7188554 | 6 |
| Average | 37.3 | 2294677 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $2295 million. That figure was $1498 million in DD’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 7 bullish hedge fund positions. DuPont de Nemours Inc (NYSE:DD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DD is 56.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on DD as the stock returned 9.2% since the end of Q3 (through 11/30) 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.
