Hedge Funds Don’t Love Oasis Petroleum Inc. (OAS) Anymore

It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 24.4% during the first 9 months of 2019 and outperformed the S&P 500 ETF by 4 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Oasis Petroleum Inc. (NYSE:OAS) changed during the first quarter.

Oasis Petroleum Inc. (NYSE:OAS) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that OAS isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


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. We’re going to review the latest hedge fund action encompassing Oasis Petroleum Inc. (NYSE:OAS).

Hedge fund activity in Oasis Petroleum Inc. (NYSE:OAS)

At Q2’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OAS over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with OAS Positions

The largest stake in Oasis Petroleum Inc. (NYSE:OAS) was held by Millennium Management, which reported holding $80.7 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $73.3 million position. Other investors bullish on the company included GMT Capital, Perella Weinberg Partners, and Point72 Asset Management.

Seeing as Oasis Petroleum Inc. (NYSE:OAS) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there is a sect of hedge funds who were dropping their positions entirely in the second quarter. Intriguingly, Clint Carlson’s Carlson Capital sold off the biggest stake of the “upper crust” of funds tracked by Insider Monkey, totaling close to $7.3 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund sold off about $3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 6 funds in the second quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Oasis Petroleum Inc. (NYSE:OAS). We will take a look at Gray Television, Inc. (NYSE:GTN), SPX FLOW, Inc. (NYSE:FLOW), GCP Applied Technologies Inc. (NYSE:GCP), and Bloomin’ Brands Inc (NASDAQ:BLMN). All of these stocks’ market caps are closest to OAS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GTN 25 218715 -2
FLOW 16 180904 -4
GCP 23 457403 -3
BLMN 22 111584 -2
Average 21.5 242152 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $242 million. That figure was $296 million in OAS’s case. Gray Television, Inc. (NYSE:GTN) is the most popular stock in this table. On the other hand SPX FLOW, Inc. (NYSE:FLOW) is the least popular one with only 16 bullish hedge fund positions. Oasis Petroleum Inc. (NYSE:OAS) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately OAS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OAS investors were disappointed as the stock returned -39.1% 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.