Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of OneConnect Financial Technology Co., Ltd. (NYSE:OCFT).
OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. Our calculations also showed that OCFT 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.
Today there are several methods shareholders have at their disposal to evaluate stocks. A couple of the less utilized methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace their index-focused peers by a significant margin (see the details here).
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a peek at the key hedge fund action regarding OneConnect Financial Technology Co., Ltd. (NYSE:OCFT).
Hedge fund activity in OneConnect Financial Technology Co., Ltd. (NYSE:OCFT)
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -67% from the fourth quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in OCFT a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) was held by Millennium Management, which reported holding $0.5 million worth of stock at the end of September. It was followed by CSat Investment Advisory with a $0.5 million position. The only other hedge fund that is bullish on the company was NWI Management.
Judging by the fact that OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) has faced bearish sentiment from the smart money, logic holds that there exists a select few fund managers who sold off their entire stakes in the third quarter. Intriguingly, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors said goodbye to the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $3.3 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $3 million worth. These moves are interesting, as total hedge fund interest fell by 6 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to OneConnect Financial Technology Co., Ltd. (NYSE:OCFT). These stocks are Eaton Vance Corp (NYSE:EV), Wright Medical Group N.V. (NASDAQ:WMGI), Jefferies Financial Group Inc. (NYSE:JEF), and Highwoods Properties Inc (NYSE:HIW). This group of stocks’ market values resemble OCFT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EV | 20 | 37006 | -4 |
| WMGI | 37 | 877799 | -9 |
| JEF | 30 | 401708 | -1 |
| HIW | 15 | 101293 | -1 |
| Average | 25.5 | 354452 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $1 million in OCFT’s case. Wright Medical Group N.V. (NASDAQ:WMGI) is the most popular stock in this table. On the other hand Highwoods Properties Inc (NYSE:HIW) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks OneConnect Financial Technology Co., Ltd. (NYSE:OCFT) is even less popular than HIW. Hedge funds clearly dropped the ball on OCFT as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on OCFT as the stock returned 38.6% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
