Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees during the first half of 2019 amid Powell’s pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the second quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards OceanFirst Financial Corp. (NASDAQ:OCFC).
Hedge fund interest in OceanFirst Financial Corp. (NASDAQ:OCFC) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare OCFC to other stocks including Getty Realty Corp. (NYSE:GTY), ArQule, Inc. (NASDAQ:ARQL), and IMAX Corporation (NYSE:IMAX) to get a better sense of its popularity. Our calculations also showed that OCFC 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.
To most market participants, hedge funds are viewed as underperforming, old investment tools of years past. While there are over 8000 funds trading at present, We look at the moguls of this group, about 750 funds. Most estimates calculate that this group of people direct bulk of the hedge fund industry’s total asset base, and by following their finest stock picks, Insider Monkey has brought to light a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
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. Let’s take a look at the key hedge fund action encompassing OceanFirst Financial Corp. (NASDAQ:OCFC).
How have hedgies been trading OceanFirst Financial Corp. (NASDAQ:OCFC)?
At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in OCFC 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.
Among these funds, Renaissance Technologies held the most valuable stake in OceanFirst Financial Corp. (NASDAQ:OCFC), which was worth $31.6 million at the end of the second quarter. On the second spot was Private Capital Management which amassed $7.8 million worth of shares. Moreover, Driehaus Capital, Millennium Management, and Marshall Wace LLP were also bullish on OceanFirst Financial Corp. (NASDAQ:OCFC), allocating a large percentage of their portfolios to this stock.
Seeing as OceanFirst Financial Corp. (NASDAQ:OCFC) has experienced a decline in interest from hedge fund managers, we can see that there was a specific group of fund managers who sold off their entire stakes by the end of the second quarter. It’s worth mentioning that Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management dumped the largest stake of the 750 funds watched by Insider Monkey, valued at about $2.5 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dropped about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to OceanFirst Financial Corp. (NASDAQ:OCFC). These stocks are Getty Realty Corp. (NYSE:GTY), ArQule, Inc. (NASDAQ:ARQL), IMAX Corporation (NYSE:IMAX), and Denny’s Corporation (NASDAQ:DENN). This group of stocks’ market caps are closest to OCFC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GTY | 10 | 92686 | 1 |
| ARQL | 25 | 356860 | 10 |
| IMAX | 12 | 44044 | -3 |
| DENN | 17 | 196803 | -2 |
| Average | 16 | 172598 | 1.5 |
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 $173 million. That figure was $64 million in OCFC’s case. ArQule, Inc. (NASDAQ:ARQL) is the most popular stock in this table. On the other hand Getty Realty Corp. (NYSE:GTY) is the least popular one with only 10 bullish hedge fund positions. OceanFirst Financial Corp. (NASDAQ:OCFC) 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 OCFC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OCFC investors were disappointed as the stock returned -4.3% 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.
