It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 20% in the first 9 months of this year (through September 30th). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 24% during the same 9-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Oxford Immunotec Global PLC (NASDAQ:OXFD).
Oxford Immunotec Global PLC (NASDAQ:OXFD) was in 16 hedge funds’ portfolios at the end of June. OXFD shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 17 hedge funds in our database with OXFD positions at the end of the previous quarter. Our calculations also showed that OXFD 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.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. We’re going to review the recent hedge fund action surrounding Oxford Immunotec Global PLC (NASDAQ:OXFD).
Hedge fund activity in Oxford Immunotec Global PLC (NASDAQ:OXFD)
At the end of the second quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the first quarter of 2019. By comparison, 13 hedge funds held shares or bullish call options in OXFD 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.
More specifically, Polar Capital was the largest shareholder of Oxford Immunotec Global PLC (NASDAQ:OXFD), with a stake worth $35.3 million reported as of the end of March. Trailing Polar Capital was Consonance Capital Management, which amassed a stake valued at $32.2 million. Redmile Group, Alyeska Investment Group, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Oxford Immunotec Global PLC (NASDAQ:OXFD) has faced a decline in interest from hedge fund managers, it’s safe to say that there was a specific group of fund managers who sold off their positions entirely last quarter. It’s worth mentioning that Noam Gottesman’s GLG Partners dropped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $6.1 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also sold off its stock, about $1.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Oxford Immunotec Global PLC (NASDAQ:OXFD) but similarly valued. We will take a look at Scorpio Bulkers Inc (NYSE:SALT), Spirit MTA REIT (NYSE:SMTA), Health Insurance Innovations Inc (NASDAQ:HIIQ), and The Container Store Group, Inc. (NYSE:TCS). This group of stocks’ market caps resemble OXFD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SALT | 10 | 18316 | 3 |
| SMTA | 19 | 112723 | -2 |
| HIIQ | 19 | 130570 | -3 |
| TCS | 18 | 23709 | 6 |
| Average | 16.5 | 71330 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $165 million in OXFD’s case. Spirit MTA REIT (NYSE:SMTA) is the most popular stock in this table. On the other hand Scorpio Bulkers Inc (NYSE:SALT) is the least popular one with only 10 bullish hedge fund positions. Oxford Immunotec Global PLC (NASDAQ:OXFD) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on OXFD as the stock returned 20.9% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
