DIRTT Environmental Solutions Ltd. (DRTT) fell out of favor with hedge funds
Our extensive research has shown that emulating smart money can generate significant returns for retail investors, which is why we follow nearly 900 prominent active fund managers and analyze their 13F quarterly deposits. Stocks bought heavily by hedge funds have historically outperformed the market, although there is no shortage of high profile defaults, such as hedge fund losses in 2018 on Facebook and Apple. Let’s take a closer look at what the funds we track think about DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT) in this article.
Is DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT) will take off soon? The best stock pickers were in a bearish mood. The number of bullish bets on hedge funds has fallen by 1 in recent months. DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT) was listed in 4 hedge fund portfolios at the end of March. The historical high for this statistic is 12. Our calculations have also shown that DRTT is not in the top 30 most popular stocks among hedge funds (click for Q1 rank). There were 5 hedge funds in our database with DRTT positions at the end of the fourth quarter.
The reputation of hedge funds as savvy investors has been tarnished over the past decade, as their hedged returns could not keep up with the unhedged returns of stock indices. Our research has shown that small-cap hedge fund stock picks managed to beat the market by double digits every year between 1999 and 2016, but the margin for outperformance has shrunk in recent years. Nonetheless, we were still able to identify in advance a select group of hedge funds that have outperformed S&P 500 ETFs by 115 percentage points since March 2017 (see details here). We were also able to identify in advance a select group of hedge funds that underperformed the market by 10 percentage points per year between 2006 and 2017. Interestingly, the margin of underperformance of these stocks has increased in recent years. Investors who are long in the market and short on these stocks would have reported more than 27% per year between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
David Nierenberg of Nierenberg Investment Management
At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, an activist hedge fund wants to buy this $ 27 biotech share for $ 50. We therefore recommended a long position to our monthly premium newsletter subscribers. We’re going through lists like the top 10 battery stocks to pick the next Tesla that will deliver 10x performance. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to market arguments at hedge fund conferences. You can sign up for our free daily newsletter on our homepage. With that in mind, we’re going to analyze the latest hedge fund action regarding DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT).
Do hedge funds think DRTT is a good stock to buy now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the fourth quarter of 2020. Below you can see the development of sentiment hedge funds owed DRTT over the past 23 quarters. So let’s see which hedge funds were among the top stock holders and which hedge funds were making big moves.
According to publicly available data on hedge funds and institutional investors compiled by Insider Monkey, MAK Capital One, managed by Michael Kaufman, holds the largest position in DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT). MAK Capital One holds a position of $ 26.7 million in the stock, comprising 6.3% of its 13F portfolio. Sitting in second place is Ari Zweiman of 683 Capital Partners, with a position of $ 22.9 million; the fund has 1.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors who hold long positions are Nierenberg Investment Management by David Nierenberg, Two Sigma Advisors by John Overdeck and David Siegel and. In terms of the portfolio weights assigned to each position, MAK Capital One assigned the largest weight to DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT), around 6.34% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, distributing 1.21% of its 13F equity portfolio to DRTT.
Judging by the fact that DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT) has faced a drop in interest from all of the hedge funds we track, logic dictates that there is a certain “level” of fund managers who have given up all of their holdings. last quarter. Oddly enough, Chuck Royce’s Royce & Associates dropped the largest stake of the 750 funds, followed by Insider Monkey, totaling around $ 0.2 million in stock, and DE Shaw of DE Shaw was right behind that decision, as the fund has lost about $ 0 million. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 fund in the last quarter.
Let’s take a look at the activity of hedge funds in other stocks similar to DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT). We’ll be looking at Americas Gold and Silver Corporation (NYSE: USAS), Express, Inc. (NYSE: EXPR), Willis Lease Finance Corporation (NASDAQ: WLFC), KemPharm Inc (NASDAQ: KMPH), AFC Gamma, Inc. (NASDAQ: AFCG ), Esports Entertainment Group Inc. (NASDAQ: GMBL) and Nathan’s Famous, Inc. (NASDAQ: NATH). The market capitalizations of this group of shares are closest to the market capitalization of DRTT.
[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF USAS position, 2.1586, -2 EXPR, 12.52710, -2 WLFC, 2.17083.0 KMPH, 6, 3923, 6 AFCG, 5 15027.5 GMBL, 4.2956.3 NATH, 4.29713, -2 Medium, 5.17571.1.1 [/table]
Check the table here if you have formatting issues.
As you can see, these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $ 18 million. That figure was $ 51 million in the case of DRTT. Express, Inc. (NYSE: EXPR) is the most popular stock in this table. On the other hand, Americas Gold and Silver Corporation (NYSE: USAS) is the least popular with only 2 bullish hedge fund positions. DIRTT Environmental Solutions Ltd. (NASDAQ: DRTT) isn’t the least popular stock in this group, but hedge fund interest is still below average. Our overall hedge fund sentiment score for DRTT is 24. Stocks with a higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that the 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 17.2% in 2021 through June 11 and have consistently beaten the market by 3.3 percentage points. A small number of hedge funds were also right to bet on DRTT as the stock has returned 15.2% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
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Disclosure: none. This article originally appeared on Insider Monkey.