• Wed. Nov 25th, 2020

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Technology

Hedge Funds Are Bullish On dMY Technology Group, Inc. (DMYT)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought dMY Technology Group, Inc. (NYSE:DMYT) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

dMY Technology Group, Inc. (NYSE:DMYT) was in 22 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. DMYT investors should pay attention to an increase in enthusiasm from smart money lately. There were 21 hedge funds in our database with DMYT holdings at the end of March. Our calculations also showed that DMYT isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

In the eyes of most traders, hedge funds are viewed as slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, We hone in on the leaders of this club, around 850 funds. It is estimated that this group of investors administer bulk of the hedge fund industry’s total capital, and by monitoring their best investments, Insider Monkey has discovered various investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Jeffrey Altman Owl Creek
Jeffrey Altman Owl Creek

Jeffrey Altman of Owl Creek Asset Management

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 precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now we’re going to take a glance at the new hedge fund action regarding dMY Technology Group, Inc. (NYSE:DMYT).

What have hedge funds been doing with dMY Technology Group, Inc. (NYSE:DMYT)?

At second quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DMYT over the last 20 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Magnetar Capital was the largest shareholder of dMY Technology Group, Inc. (NYSE:DMYT), with a stake worth $14.1 million reported as of the end of September. Trailing Magnetar Capital was Millennium Management, which amassed a stake valued at $13 million. Fort Baker Capital Management, Glazer Capital, and BlueCrest Capital Mgmt. were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fort Baker Capital Management allocated the biggest weight to dMY Technology Group, Inc. (NYSE:DMYT), around 9.27% of its 13F portfolio. Bulldog Investors is also relatively very bullish on the stock, designating 0.85 percent of its 13F equity portfolio to DMYT.

Now, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the biggest position in dMY Technology Group, Inc. (NYSE:DMYT). Millennium Management had $13 million invested in the company at the end of the quarter. Jeffrey Altman’s Owl Creek Asset Management also initiated a $6 million position during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, Sander Gerber’s Hudson Bay Capital Management, and Jeffrey Tannenbaum’s Fir Tree.

Let’s also examine hedge fund activity in other stocks similar to dMY Technology Group, Inc. (NYSE:DMYT). We will take a look at Gold Resource Corporation (NYSE:GORO), West Bancorporation, Inc. (NASDAQ:WTBA), Chatham Lodging Trust (NYSE:CLDT), ShotSpotter, Inc. (NASDAQ:SSTI), Funko, Inc. (NASDAQ:FNKO), Sierra Bancorp (NASDAQ:BSRR), and SCVX Corp. (NYSE:SCVX). This group of stocks’ market values are closest to DMYT’s market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GORO,7,2593,1 WTBA,3,8440,-1 CLDT,14,28588,6 SSTI,7,17252,2 FNKO,7,22431,-5 BSRR,9,10815,4 SCVX,13,71416,-1 Average,8.6,23076,0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $96 million in DMYT’s case. Chatham Lodging Trust (NYSE:CLDT) is the most popular stock in this table. On the other hand West Bancorporation, Inc. (NASDAQ:WTBA) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks dMY Technology Group, Inc. (NYSE:DMYT) is more popular among hedge funds. Our overall hedge fund sentiment score for DMYT is 86. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 24.8% in 2020 through the end of September but still managed to beat the market by 19.3 percentage points. Hedge funds were also right about betting on DMYT as the stock returned 27.2% since the end of June and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.

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