The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Opko Health Inc. (NYSE:OPK).
Opko Health Inc. (NYSE:OPK) has experienced a decrease in hedge fund sentiment lately. OPK was in 13 hedge funds’ portfolios at the end of the first quarter of 2019. There were 15 hedge funds in our database with OPK positions at the end of the previous quarter. Our calculations also showed that OPK isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s take a gander at the fresh hedge fund action surrounding Opko Health Inc. (NYSE:OPK).
Hedge fund activity in Opko Health Inc. (NYSE:OPK)
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OPK over the last 15 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Opko Health Inc. (NYSE:OPK) was held by Citadel Investment Group, which reported holding $5.6 million worth of stock at the end of March. It was followed by D E Shaw with a $4.5 million position. Other investors bullish on the company included Highbridge Capital Management, Millennium Management, and Marshall Wace LLP.
Judging by the fact that Opko Health Inc. (NYSE:OPK) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Israel Englander’s Millennium Management dumped the largest position of the 700 funds watched by Insider Monkey, worth an estimated $4.2 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $0.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Opko Health Inc. (NYSE:OPK). We will take a look at Dine Brands Global, Inc. (NYSE:DIN), Sunrun Inc (NASDAQ:RUN), American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), and Virtusa Corporation (NASDAQ:VRTU). This group of stocks’ market values are closest to OPK’s market value.
|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 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $22 million in OPK’s case. DineEquity Inc (NYSE:DIN) is the most popular stock in this table. On the other hand Virtusa Corporation (NASDAQ:VRTU) is the least popular one with only 10 bullish hedge fund positions. Opko Health Inc. (NYSE:OPK) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately OPK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OPK investors were disappointed as the stock returned -23% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.