Hedge Funds Are Warming Up To ONEOK, Inc. (OKE)

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 ONEOK, Inc. (NYSE:OKE) makes for a good investment right now.

Is ONEOK, Inc. (NYSE:OKE) a marvelous investment now? Hedge funds were in an optimistic mood. The number of long hedge fund bets rose by 6 in recent months. ONEOK, Inc. (NYSE:OKE) was in 26 hedge funds’ portfolios at the end of June. The all time high for this statistic is 31. Our calculations also showed that OKE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To most stock holders, hedge funds are assumed to be unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open today, Our experts hone in on the aristocrats of this group, approximately 850 funds. These hedge fund managers manage bulk of all hedge funds’ total asset base, and by shadowing their top equity investments, Insider Monkey has identified numerous investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

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. Now let’s take a peek at the new hedge fund action encompassing ONEOK, Inc. (NYSE:OKE).

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

At the end of June, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OKE over the last 24 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Among these funds, Millennium Management held the most valuable stake in ONEOK, Inc. (NYSE:OKE), which was worth $35.5 million at the end of the second quarter. On the second spot was Marshall Wace LLP which amassed $27.6 million worth of shares. Adage Capital Management, Citadel Investment Group, 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 Heronetta Management allocated the biggest weight to ONEOK, Inc. (NYSE:OKE), around 3.83% of its 13F portfolio. Horseman Capital Management is also relatively very bullish on the stock, setting aside 1.05 percent of its 13F equity portfolio to OKE.

Now, some big names have been driving this bullishness. Encompass Capital Advisors, managed by Todd J. Kantor, assembled the biggest position in ONEOK, Inc. (NYSE:OKE). Encompass Capital Advisors had $11.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $9.7 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Karim Abbadi and Edward McBride’s Centiva Capital, and Bruce Kovner’s Caxton Associates LP.

Let’s now review hedge fund activity in other stocks similar to ONEOK, Inc. (NYSE:OKE). These stocks are Yandex NV (NASDAQ:YNDX), CDW Corporation (NASDAQ:CDW), Ryanair Holdings plc (NASDAQ:RYAAY), Fresenius Medical Care AG & Co. (NYSE:FMS), XP Inc. (NASDAQ:XP), Northern Trust Corporation (NASDAQ:NTRS), and Expedia Group Inc (NASDAQ:EXPE). This group of stocks’ market values are closest to OKE’s market value.

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As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $1512 million. That figure was $179 million in OKE’s case. Expedia Group Inc (NASDAQ:EXPE) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (NYSE:FMS) is the least popular one with only 5 bullish hedge fund positions. ONEOK, Inc. (NYSE:OKE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OKE is 48. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on OKE as the stock returned 19.1% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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

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