Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in DXP Enterprises Inc (NASDAQ:DXPE)? The smart money sentiment can provide an answer to this question.
DXP Enterprises Inc (NASDAQ:DXPE) has seen a decrease in activity from the world’s largest hedge funds of late. DXPE was in 10 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with DXPE holdings at the end of the previous quarter. 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 Varonis Systems Inc (NASDAQ:VRNS), Casa Therapeutics Inc (NASDAQ:CARA), and Agenus Inc (NASDAQ:AGEN) to gather more data points.
Follow Dxp Enterprises Inc (NASDAQ:DXPE)
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Keeping this in mind, let’s review the key action encompassing DXP Enterprises Inc (NASDAQ:DXPE).
How are hedge funds trading DXP Enterprises Inc (NASDAQ:DXPE)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the second quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, William C. Martin’s Raging Capital Management has the largest position in DXP Enterprises Inc (NASDAQ:DXPE), worth close to $12.1 million, accounting for 1.6% of its total 13F portfolio. The second largest stake is held by Talara Capital Management, led by David Zusman, holding a $7.6 million position; 4.7% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Charles Paquelet’s Skylands Capital, Jim Simons’s Renaissance Technologies and Lawrence Sapanski’s Scoria Capital.
Because DXP Enterprises Inc (NASDAQ:DXPE) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of money managers who were dropping their positions entirely last quarter. Interestingly, D E Shaw dropped the largest investment of the 700 funds followed by Insider Monkey, worth close to $1.2 million in stock. Neil Chriss’s fund, Hutchin Hill Capital, also said goodbye to its stock, about $0.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as DXP Enterprises Inc (NASDAQ:DXPE) but similarly valued. These stocks are Varonis Systems Inc (NASDAQ:VRNS), Casa Therapeutics Inc (NASDAQ:CARA), Agenus Inc (NASDAQ:AGEN), and Rockwell Medical Inc (NASDAQ:RMTI). All of these stocks’ market caps are closest to DXPE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRNS | 4 | 36724 | -3 |
| CARA | 14 | 44785 | 2 |
| AGEN | 16 | 65585 | -1 |
| RMTI | 10 | 12336 | 2 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $32 million in DXPE’s case. Agenus Inc (NASDAQ:AGEN) is the most popular stock in this table. On the other hand Varonis Systems Inc (NASDAQ:VRNS) is the least popular one with only 4 bullish hedge fund positions. DXP Enterprises Inc (NASDAQ:DXPE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AGEN might be a better candidate to consider a long position.
