In this article we will check out the progression of hedge fund sentiment towards Owens Corning (NYSE:OC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is OC a good stock to buy now? Owens Corning (NYSE:OC) investors should be aware of an increase in hedge fund sentiment recently. Owens Corning (NYSE:OC) was in 43 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 47. There were 37 hedge funds in our database with OC holdings at the end of June. Our calculations also showed that OC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are assumed to be underperforming, outdated investment tools of years past. While there are over 8000 funds with their doors open today, We look at the masters of this group, about 850 funds. These hedge fund managers have their hands on the majority of the hedge fund industry’s total asset base, and by observing their top investments, Insider Monkey has brought to light numerous investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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Do Hedge Funds Think OC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in OC over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Owens Corning (NYSE:OC), with a stake worth $173.2 million reported as of the end of September. Trailing Citadel Investment Group was Adage Capital Management, which amassed a stake valued at $82 million. Holocene Advisors, Junto Capital Management, and AQR Capital Management 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 Lodge Hill Capital allocated the biggest weight to Owens Corning (NYSE:OC), around 3.17% of its 13F portfolio. Appian Way Asset Management is also relatively very bullish on the stock, designating 2.07 percent of its 13F equity portfolio to OC.
As aggregate interest increased, specific money managers have jumped into Owens Corning (NYSE:OC) headfirst. Shellback Capital, managed by Doug Gordon, Jon Hilsabeck and Don Jabro, established the most outsized position in Owens Corning (NYSE:OC). Shellback Capital had $22.5 million invested in the company at the end of the quarter. Jack Woodruff’s Candlestick Capital Management also initiated a $20.9 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Eduardo Abush’s Waterfront Capital Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks similar to Owens Corning (NYSE:OC). We will take a look at SEI Investments Company (NASDAQ:SEIC), Genpact Limited (NYSE:G), Hubbell Incorporated (NYSE:HUBB), Mirati Therapeutics, Inc. (NASDAQ:MRTX), Teck Resources Ltd (NYSE:TECK), Quanta Services Inc (NYSE:PWR), and AptarGroup, Inc. (NYSE:ATR). This group of stocks’ market valuations resemble OC’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 31.3 hedge funds with bullish positions and the average amount invested in these stocks was $688 million. That figure was $683 million in OC’s case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand Teck Resources Ltd (NYSE:TECK) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Owens Corning (NYSE:OC) is more popular among hedge funds. Our overall hedge fund sentiment score for OC is 87.4. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on OC, though not to the same extent, as the stock returned 11.4% since the end of September (through December 8th) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.