After several tireless days we have finished crunching the numbers from the more than 700 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 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Denbury Resources Inc. (NYSE:DNR).
Is Denbury Resources Inc. (NYSE:DNR) a worthy investment right now? Prominent investors are turning bullish. The number of bullish hedge fund positions increased by 2 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Zafgen Inc (NASDAQ:ZFGN), PharMerica Corporation (NYSE:PMC), and Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) to gather more data points.
In the eyes of most traders, hedge funds are seen as unimportant, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at the moment, Our researchers look at the leaders of this club, about 700 funds. It is estimated that this group of investors control most of the hedge fund industry’s total asset base, and by keeping track of their highest performing stock picks, Insider Monkey has identified many investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, let’s take a gander at the latest action regarding Denbury Resources Inc. (NYSE:DNR).
What does the smart money think about Denbury Resources Inc. (NYSE:DNR)?
Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ron Gutfleish’s Elm Ridge Capital has the number one position in Denbury Resources Inc. (NYSE:DNR), worth close to $15.8 million, accounting for 2.3% of its total 13F portfolio. Coming in second is Paul Marshall and Ian Wace of Marshall Wace LLP, with a $11 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions encompass Jim Simons’ Renaissance Technologies, Ray Dalio’s Bridgewater Associates and Israel Englander’s Millennium Management.
As industrywide interest jumped, key money managers have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, created the most valuable position in Denbury Resources Inc. (NYSE:DNR). Renaissance Technologies had $11 million invested in the company at the end of the quarter. Ryan Heslop and Ariel Warszawski’s Firefly Value Partners also made a $2.4 million investment in the stock during the quarter. The following funds were also among the new DNR investors: Benjamin A. Smith’s Laurion Capital Management, Neil Chriss’ Hutchin Hill Capital, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Denbury Resources Inc. (NYSE:DNR) but similarly valued. We will take a look at Zafgen Inc (NASDAQ:ZFGN), PharMerica Corporation (NYSE:PMC), Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), and HudBay Minerals Inc Ord Shs (NYSE:HBM). This group of stocks’ market valuations are similar to DNR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $70 million in DNR’s case. PharMerica Corporation (NYSE:PMC) is the most popular stock in this table. On the other hand HudBay Minerals Inc Ord Shs (NYSE:HBM) is the least popular one with only 7 bullish hedge fund positions. Denbury Resources Inc. (NYSE:DNR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PMC might be a better candidate to consider a long position.