The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Dyadic International, Inc. (NASDAQ:DYAI).
Is Dyadic International, Inc. (NASDAQ:DYAI) a good investment today? Hedge funds were betting on the stock. The number of bullish hedge fund bets inched up by 1 lately. Dyadic International, Inc. (NASDAQ:DYAI) was in 4 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. Our calculations also showed that DYAI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 we’re going to analyze the fresh hedge fund action regarding Dyadic International, Inc. (NASDAQ:DYAI).
How are hedge funds trading Dyadic International, Inc. (NASDAQ:DYAI)?
Heading into the fourth quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DYAI over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Bandera Partners, managed by Gregory Bylinsky and Jefferson Gramm, holds the number one position in Dyadic International, Inc. (NASDAQ:DYAI). Bandera Partners has a $3.6 million position in the stock, comprising 2.4% of its 13F portfolio. On Bandera Partners’s heels is Sio Capital, led by Michael Castor, holding a $1.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish consist of Cliff Asness’s AQR Capital Management, Bruce Kovner’s Caxton Associates LP and . In terms of the portfolio weights assigned to each position Bandera Partners allocated the biggest weight to Dyadic International, Inc. (NASDAQ:DYAI), around 2.36% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, earmarking 0.31 percent of its 13F equity portfolio to DYAI.
As one would reasonably expect, key hedge funds were breaking ground themselves. AQR Capital Management, managed by Cliff Asness, assembled the biggest position in Dyadic International, Inc. (NASDAQ:DYAI). AQR Capital Management had $0.1 million invested in the company at the end of the quarter. Bruce Kovner’s Caxton Associates LP also initiated a $0.1 million position during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Dyadic International, Inc. (NASDAQ:DYAI) but similarly valued. We will take a look at CTO Realty Growth Inc (NYSE:CTO), Concrete Pumping Holdings, Inc. (NASDAQ:BBCP), XOMA Corp (NASDAQ:XOMA), Arcimoto, Inc. (NASDAQ:FUV), Bioceres Crop Solutions Corp. (NYSE:BIOX), NL Industries, Inc. (NYSE:NL), and Atomera Incorporated (NASDAQ:ATOM). This group of stocks’ market values are similar to DYAI’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.4 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $5 million in DYAI’s case. XOMA Corp (NASDAQ:XOMA) is the most popular stock in this table. On the other hand Arcimoto, Inc. (NASDAQ:FUV) is the least popular one with only 1 bullish hedge fund positions. Dyadic International, Inc. (NASDAQ:DYAI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DYAI is 39.8. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately DYAI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); DYAI investors were disappointed as the stock returned -23.6% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.