The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 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 September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Darling Ingredients Inc. (NYSE:DAR) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Is Darling Ingredients Inc. (NYSE:DAR) an excellent investment now? Investors who are in the know were cutting their exposure. The number of bullish hedge fund bets shrunk by 8 in recent months. Darling Ingredients Inc. (NYSE:DAR) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 41. Our calculations also showed that DAR 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. Now let’s review the latest hedge fund action encompassing Darling Ingredients Inc. (NYSE:DAR).
Do Hedge Funds Think DAR Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DAR over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in Darling Ingredients Inc. (NYSE:DAR), which was worth $209.2 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $117 million worth of shares. Parsifal Capital Management, Millennium Management, and Anomaly Capital Management 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 Parsifal Capital Management allocated the biggest weight to Darling Ingredients Inc. (NYSE:DAR), around 6.26% of its 13F portfolio. Anomaly Capital Management is also relatively very bullish on the stock, earmarking 2.11 percent of its 13F equity portfolio to DAR.
Judging by the fact that Darling Ingredients Inc. (NYSE:DAR) has faced bearish sentiment from the smart money, it’s easy to see that there were a few fund managers that elected to cut their positions entirely by the end of the third quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest position of the 750 funds monitored by Insider Monkey, comprising about $20.8 million in stock. Naval Khera’s fund, Brightline Capital, also dumped its stock, about $20.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 8 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 Darling Ingredients Inc. (NYSE:DAR) but similarly valued. These stocks are Dropbox, Inc. (NASDAQ:DBX), Globant SA (NYSE:GLOB), Atmos Energy Corporation (NYSE:ATO), Bunge Limited (NYSE:BG), Universal Health Services, Inc. (NYSE:UHS), Axovant Sciences Ltd (NYSE:AXON), and Lamar Advertising Company (NASDAQ:LAMR). This group of stocks’ market values match DAR’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $559 million. That figure was $659 million in DAR’s case. Universal Health Services, Inc. (NYSE:UHS) is the most popular stock in this table. On the other hand Atmos Energy Corporation (NYSE:ATO) is the least popular one with only 16 bullish hedge fund positions. Darling Ingredients Inc. (NYSE:DAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DAR is 52.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, DAR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DAR were disappointed as the stock returned -11.3% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.