Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Dynegy Inc. (NYSE:DYN).
Is Dynegy Inc. (NYSE:DYN) a bargain? Investors who are in the know are in a bearish mood. The number of long hedge fund positions fell by 12 recently. 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 Cal-Maine Foods Inc (NASDAQ:CALM), International Game Technology (NYSE:IGT), and The Cheesecake Factory Incorporated (NASDAQ:CAKE) to gather more data points.
If you’d ask most investors, hedge funds are perceived as slow, outdated investment tools of the past. While there are more than an 8000 funds with their doors open at present, Our experts hone in on the top tier of this club, approximately 700 funds. These money managers command bulk of the smart money’s total capital, and by paying attention to their top investments, Insider Monkey has revealed a number of investment strategies that have historically outpaced the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, let’s take a peek at the fresh action surrounding Dynegy Inc. (NYSE:DYN).
What does the smart money think about Dynegy Inc. (NYSE:DYN)?
At the end of the third quarter, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Oaktree Capital Management, managed by Howard Marks, holds the biggest position in Dynegy Inc. (NYSE:DYN). Oaktree Capital Management has a $203.4 million position in the stock, comprising 2.7% of its 13F portfolio. Coming in second is D E Shaw, which holds a $117.2 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions consist of Jonathan Barrett and Paul Segal’s Luminus Management, Clint Carlson’s Carlson Capital and Israel Englander’s Millennium Management.