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Do Hedge Funds Love OncoCyte Corporation (OCX)?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of OncoCyte Corporation (NYSE:OCX) based on that data.

Is OncoCyte Corporation (NYSE:OCX) undervalued? The smart money is becoming hopeful. The number of long hedge fund bets moved up by 1 in recent months. Our calculations also showed that OCX isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

To most investors, hedge funds are seen as underperforming, outdated financial tools of yesteryear. While there are greater than 8000 funds trading at the moment, Our experts look at the masters of this group, about 850 funds. These hedge fund managers manage the lion’s share of the hedge fund industry’s total capital, and by tailing their finest stock picks, Insider Monkey has found various investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the recent hedge fund action surrounding OncoCyte Corporation (NYSE:OCX).

How have hedgies been trading OncoCyte Corporation (NYSE:OCX)?

Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in OCX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is OCX A Good Stock To Buy?

Among these funds, Broadwood Capital held the most valuable stake in OncoCyte Corporation (NYSE:OCX), which was worth $33.5 million at the end of the third quarter. On the second spot was Pura Vida Investments which amassed $13.7 million worth of shares. P.A.W. CAPITAL PARTNERS, Citadel Investment Group, and Ardsley Partners 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 Broadwood Capital allocated the biggest weight to OncoCyte Corporation (NYSE:OCX), around 3.91% of its 13F portfolio. Pura Vida Investments is also relatively very bullish on the stock, earmarking 3.48 percent of its 13F equity portfolio to OCX.

Consequently, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the biggest position in OncoCyte Corporation (NYSE:OCX). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. Philip Hempleman’s Ardsley Partners also initiated a $0 million position during the quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as OncoCyte Corporation (NYSE:OCX) but similarly valued. We will take a look at Chemung Financial Corp. (NASDAQ:CHMG), Green Plains Partners LP (NASDAQ:GPP), MVB Financial Corp. (NASDAQ:MVBF), and SunOpta, Inc. (NASDAQ:STKL). This group of stocks’ market caps resemble OCX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHMG 3 9092 0
GPP 2 15954 1
MVBF 7 18486 3
STKL 12 59990 -1
Average 6 25881 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $48 million in OCX’s case. SunOpta, Inc. (NASDAQ:STKL) is the most popular stock in this table. On the other hand Green Plains Partners LP (NASDAQ:GPP) is the least popular one with only 2 bullish hedge fund positions. OncoCyte Corporation (NYSE:OCX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately OCX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); OCX investors were disappointed as the stock returned 12.7% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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