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Hedge Funds Are Selling Office Depot Inc (ODP)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Office Depot Inc (NYSE:ODP).

Is Office Depot Inc (NYSE:ODP) a buy right now? Prominent investors are in a bearish mood. The number of bullish hedge fund bets decreased by 13 lately. ODP was in 34 hedge funds’ portfolios at the end of the third quarter of 2016. There were 47 hedge funds in our database with ODP holdings at the end of the previous quarter. At the end of this article we will also compare ODP to other stocks including Esterline Technologies Corporation (NYSE:ESL), Mueller Industries, Inc. (NYSE:MLI), and Lithia Motors Inc (NYSE:LAD) to get a better sense of its popularity.

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Now, let’s view the fresh action encompassing Office Depot Inc (NYSE:ODP).

Hedge fund activity in Office Depot Inc (NYSE:ODP)

At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

ODP
When looking at the institutional investors followed by Insider Monkey, Paulson & Co, managed by John Paulson, holds the number one position in Office Depot Inc (NYSE:ODP). Paulson & Co has a $54.9 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is Glenn J. Krevlin of Glenhill Advisors, with a $46.6 million position; 2.8% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Seth Klarman’s Baupost Group, Cliff Asness’ AQR Capital Management and David Costen Haley’s HBK Investments.

Seeing as Office Depot Inc (NYSE:ODP) has experienced declining sentiment from hedge fund managers, we can see that there was a specific group of money managers that elected to cut their entire stakes by the end of the third quarter. At the top of the heap, Robert Emil Zoellner’s Alpine Associates sold off the biggest position of all the hedgies watched by Insider Monkey, totaling about $19.3 million in call options., and Matthew Mark’s Jet Capital Investors was right behind this move, as the fund dropped about $19 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 13 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Office Depot Inc (NYSE:ODP). These stocks are Esterline Technologies Corporation (NYSE:ESL), Mueller Industries, Inc. (NYSE:MLI), Lithia Motors Inc (NYSE:LAD), and Och-Ziff Capital Management Group LLC (NYSE:OZM). All of these stocks’ market caps are closest to ODP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ESL 18 377920 8
MLI 15 249669 -1
LAD 20 328738 -6
OZM 17 186191 1

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $286 million. That figure was $284 million in ODP’s case. Lithia Motors Inc (NYSE:LAD) is the most popular stock in this table. On the other hand Mueller Industries, Inc. (NYSE:MLI) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Office Depot Inc (NYSE:ODP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.