Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Norbord Inc. (NYSE:OSB) in this article.
Norbord Inc. (NYSE:OSB) investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. OSB was in 7 hedge funds’ portfolios at the end of December. There were 10 hedge funds in our database with OSB positions at the end of the previous quarter. Our calculations also showed that OSB isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the latest hedge fund action regarding Norbord Inc. (NYSE:OSB).
What have hedge funds been doing with Norbord Inc. (NYSE:OSB)?
Heading into the first quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -30% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OSB over the last 14 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in Norbord Inc. (NYSE:OSB) was held by Two Sigma Advisors, which reported holding $9.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $4.3 million position. Other investors bullish on the company included Gotham Asset Management, Arrowstreet Capital, and Millennium Management.
Judging by the fact that Norbord Inc. (NYSE:OSB) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there were a few funds that elected to cut their entire stakes last quarter. Intriguingly, D. E. Shaw’s D E Shaw said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, worth about $1.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its stock, about $1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Norbord Inc. (NYSE:OSB) but similarly valued. These stocks are SkyWest, Inc. (NASDAQ:SKYW), Prospect Capital Corporation (NASDAQ:PSEC), Brandywine Realty Trust (NYSE:BDN), and Colony Capital Inc (NYSE:CLNY). This group of stocks’ market valuations are closest to OSB’s market valuation.
|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 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $152 million. That figure was $19 million in OSB’s case. Colony Capital Inc (NYSE:CLNY) is the most popular stock in this table. On the other hand Prospect Capital Corporation (NASDAQ:PSEC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Norbord Inc. (NYSE:OSB) is even less popular than PSEC. Hedge funds dodged a bullet by taking a bearish stance towards OSB. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately OSB wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); OSB investors were disappointed as the stock returned -9.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.