Here is What Hedge Funds Think About Denbury Inc. (DEN)

·6 min read

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Denbury Inc. (NYSE:DEN).

Denbury Inc. (NYSE:DEN) shareholders have witnessed a decrease in activity from the world's largest hedge funds of late. Denbury Inc. (NYSE:DEN) was in 29 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that DEN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

best high yield dividend stocks according to george soros
best high yield dividend stocks according to george soros

George Soros of Soros Fund Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a gander at the new hedge fund action surrounding Denbury Inc. (NYSE:DEN).

Do Hedge Funds Think DEN Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in DEN a year ago. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

The largest stake in Denbury Inc. (NYSE:DEN) was held by Silver Point Capital, which reported holding $339.2 million worth of stock at the end of June. It was followed by Hein Park Capital with a $167.6 million position. Other investors bullish on the company included Cyrus Capital Partners, Discovery Capital Management, and Empyrean Capital Partners. In terms of the portfolio weights assigned to each position Cyrus Capital Partners allocated the biggest weight to Denbury Inc. (NYSE:DEN), around 37.94% of its 13F portfolio. Hein Park Capital is also relatively very bullish on the stock, earmarking 31.6 percent of its 13F equity portfolio to DEN.

Because Denbury Inc. (NYSE:DEN) has faced a decline in interest from hedge fund managers, it's easy to see that there was a specific group of fund managers that elected to cut their positions entirely heading into Q3. It's worth mentioning that George Soros's Soros Fund Management cut the biggest position of the 750 funds monitored by Insider Monkey, valued at close to $47.9 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also cut its stock, about $45.5 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds heading into Q3.

Let's now review hedge fund activity in other stocks similar to Denbury Inc. (NYSE:DEN). We will take a look at Southwest Gas Holdings, Inc. (NYSE:SWX), Southwestern Energy Company (NYSE:SWN), Turning Point Therapeutics, Inc. (NASDAQ:TPTX), Dillard's, Inc. (NYSE:DDS), The Brink's Company (NYSE:BCO), Papa John's International, Inc. (NASDAQ:PZZA), and New Jersey Resources Corp (NYSE:NJR). This group of stocks' market caps are similar to DEN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWX,19,145257,-4 SWN,27,257726,5 TPTX,28,646677,-5 DDS,18,91497,5 BCO,17,346879,-7 PZZA,30,739296,-2 NJR,12,19131,0 Average,21.6,320923,-1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $321 million. That figure was $997 million in DEN's case. Papa John's International, Inc. (NASDAQ:PZZA) is the most popular stock in this table. On the other hand New Jersey Resources Corp (NYSE:NJR) is the least popular one with only 12 bullish hedge fund positions. Denbury Inc. (NYSE:DEN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DEN is 80.2. 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 positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately DEN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on DEN were disappointed as the stock returned -4.8% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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