Hedge Funds Are Buying Universal Display Corporation (OLED)

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Universal Display Corporation (NASDAQ:OLED) makes for a good investment right now.

Universal Display Corporation (NASDAQ:OLED) was in 23 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 33. OLED investors should be aware of an increase in hedge fund interest in recent months. There were 17 hedge funds in our database with OLED holdings at the end of March. Our calculations also showed that OLED 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, 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 view the recent hedge fund action surrounding Universal Display Corporation (NASDAQ:OLED).

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

At second quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OLED over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in Universal Display Corporation (NASDAQ:OLED), which was worth $39.7 million at the end of the second quarter. On the second spot was Kayak Investment Partners which amassed $39.5 million worth of shares. PEAK6 Capital Management, AQR Capital Management, and D E Shaw 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 Kayak Investment Partners allocated the biggest weight to Universal Display Corporation (NASDAQ:OLED), around 4.75% of its 13F portfolio. Chiron Investment Management is also relatively very bullish on the stock, dishing out 0.15 percent of its 13F equity portfolio to OLED.

As aggregate interest increased, some big names were breaking ground themselves. Bridgewater Associates, managed by Ray Dalio, assembled the largest position in Universal Display Corporation (NASDAQ:OLED). Bridgewater Associates had $3.5 million invested in the company at the end of the quarter. Renaissance Technologies also made a $3.5 million investment in the stock during the quarter. The other funds with brand new OLED positions are Ryan Caldwell’s Chiron Investment Management, Matthew Hulsizer’s PEAK6 Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Universal Display Corporation (NASDAQ:OLED) but similarly valued. These stocks are Lithia Motors Inc (NYSE:LAD), Henry Schein, Inc. (NASDAQ:HSIC), GFL Environmental Inc. (NYSE:GFL), Paylocity Holding Corp (NASDAQ:PCTY), Ares Management Corp (NYSE:ARES), Kirkland Lake Gold Ltd. (NYSE:KL), and Opendoor Technologies Inc. (NASDAQ:OPEN). This group of stocks’ market valuations resemble OLED’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $1047 million. That figure was $105 million in OLED’s case. Lithia Motors Inc (NYSE:LAD) is the most popular stock in this table. On the other hand Paylocity Holding Corp (NASDAQ:PCTY) is the least popular one with only 19 bullish hedge fund positions. Universal Display Corporation (NASDAQ:OLED) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OLED is 35.5. 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. 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 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 surpassed the market again by 1.6 percentage points. Unfortunately OLED wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); OLED investors were disappointed as the stock returned -21.9% since the end of June (through 10/22) 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 most of these stocks already outperformed the market in 2021.

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