Do Hedge Funds Love Bank OZK (OZK)?

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 Bank OZK (NASDAQ:OZK).

Bank OZK (NASDAQ:OZK) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 25. OZK investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. There were 25 hedge funds in our database with OZK holdings at the end of March. Our calculations also showed that OZK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this stock pitch. We go through lists like the 10 best growth stocks to buy 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 let’s go over the recent hedge fund action surrounding Bank OZK (NASDAQ:OZK).

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

Heading into the third quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OZK over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Diamond Hill Capital, managed by Ric Dillon, holds the most valuable position in Bank OZK (NASDAQ:OZK). Diamond Hill Capital has a $144.3 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), which holds a $27.4 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish encompass Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Richard Driehaus’s Driehaus Capital. In terms of the portfolio weights assigned to each position Global Frontier Investments allocated the biggest weight to Bank OZK (NASDAQ:OZK), around 3.98% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, earmarking 0.55 percent of its 13F equity portfolio to OZK.

Seeing as Bank OZK (NASDAQ:OZK) has experienced a decline in interest from hedge fund managers, it’s easy to see that there exists a select few hedge funds that elected to cut their positions entirely last quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group sold off the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $10.4 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also dumped its stock, about $1.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 6 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Bank OZK (NASDAQ:OZK) but similarly valued. We will take a look at Cousins Properties Incorporated (NYSE:CUZ), Quidel Corporation (NASDAQ:QDEL), Valley National Bancorp (NASDAQ:VLY), Avis Budget Group Inc. (NASDAQ:CAR), Open Lending Corporation (NASDAQ:LPRO), Regal Beloit Corporation (NYSE:RBC), and MAXIMUS, Inc. (NYSE:MMS). This group of stocks’ market values match OZK’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $447 million. That figure was $256 million in OZK’s case. Regal Beloit Corporation (NYSE:RBC) is the most popular stock in this table. On the other hand Valley National Bancorp (NASDAQ:VLY) is the least popular one with only 13 bullish hedge fund positions. Bank OZK (NASDAQ:OZK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OZK is 38.5. 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 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% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on OZK as the stock returned 7.3% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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