Big Money Selling Dynatrace
So, what’s Big Money? Said simply, that’s when a stock moves in price alongside chunky volumes. It’s indicative of institutions buying or selling the shares.
Smart money managers are always looking for the next hot stock. And Dynatrace has many fundamental qualities that are attractive. But sometimes when values decline, money managers look to sell or may be forced to liquidate.
This downward movement creates uncertainty for the stock going forward. And as I’ll show you, the Big Money has been exiting the shares recently.
You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way. But Big Money sells too, especially when the situation changes.
That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the Big Money signals DT has made the last year.
We’ve recently seen Big Money selling activity. Each red bar signals big trading volumes as the stock price dipped:
In the last three months the stock attracted 14 Big Money sell signals. Generally speaking, recent red bars could mean more uncertainty is ahead.
Now, let’s check out technical action grabbing my attention:
- 3-month underperformance vs. Technology Select Sector SPDR Fund (-27.9% vs. XLK)
Vast underperformance is an obvious red flag for leading stocks.
Next, it’s a good idea to check under the hood. Meaning, I want to understand the fundamental story too. As you can see, Dynatrace has been growing sales and earnings at double-digit rates. Take a look:
- 3-year sales growth rate (+21.3%)
- 1-year earnings growth rate (+24.5%)
Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term. But when there is disagreement between the two, it could mean the situation has changed. Or it could be a huge long-term value play on a great stock.
In fact, DT has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has had buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis. Usually when selling dries up, great stocks rally again – it’s definitely happened with DT in the past.
DT has had a lot of qualities that attracted Big Money. Since it began trading in 2019, it’s made the MAPsignals Top 20 list nine times, with its first appearance on 06/22/2021, and declining (-10.88%) since.
Despite the recent decline, the fundamental story is strong. The blue bars below show the times that Dynatrace was a top pick since 2019 (look how the price ramps up):
It’s been a top stock in the technology sector according to the MAPsignals process. I wouldn’t be surprised if DT reappears on this list in the years to come. Let’s tie this all together.
The Bottom Line
The Dynatrace decline makes the stock look oversold. Big Money selling in the shares is signaling to take notice. Given the historical gains in share price and strong fundamentals, this stock could be a huge value play long-term and still worth a spot in a growth-oriented portfolio.
Disclosure: the author holds no positions in DT at the time of publication.
Learn more about the MAPsignals process here.