World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is Oil States International, Inc. (NYSE:OIS) a healthy stock for your portfolio? The smart money is selling. The number of bullish hedge fund bets retreated by 5 lately. Our calculations also showed that OIS isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the key hedge fund action encompassing Oil States International, Inc. (NYSE:OIS).
What have hedge funds been doing with Oil States International, Inc. (NYSE:OIS)?
At Q2’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -36% from the first quarter of 2019. On the other hand, there were a total of 9 hedge funds with a bullish position in OIS a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the biggest position in Oil States International, Inc. (NYSE:OIS), worth close to $22.7 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $5.8 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions include Renaissance Technologies, Ken Fisher’s Fisher Asset Management and D. E. Shaw’s D E Shaw.
Since Oil States International, Inc. (NYSE:OIS) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies that elected to cut their full holdings by the end of the second quarter. Intriguingly, Nick Niell’s Arrowgrass Capital Partners said goodbye to the largest investment of the “upper crust” of funds monitored by Insider Monkey, worth close to $2.6 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dropped its stock, about $2.3 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 5 funds by the end of the second quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Oil States International, Inc. (NYSE:OIS) but similarly valued. We will take a look at PGT Innovations Inc. (NYSE:PGTI), Orthofix Medical Inc. (NASDAQ:OFIX), Boston Private Financial Holdings, Inc. (NASDAQ:BPFH), and Third Point Reinsurance Ltd (NYSE:TPRE). All of these stocks’ market caps match OIS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $35 million in OIS’s case. Third Point Reinsurance Ltd (NYSE:TPRE) is the most popular stock in this table. On the other hand Orthofix Medical Inc. (NASDAQ:OFIX) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Oil States International, Inc. (NYSE:OIS) is even less popular than OFIX. Hedge funds dodged a bullet by taking a bearish stance towards OIS. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately OIS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); OIS investors were disappointed as the stock returned -27.3% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.