At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not ONE Gas Inc (NYSE:OGS) makes for a good investment right now.
Is OGS a good stock to buy now? The best stock pickers were taking a bearish view. The number of bullish hedge fund bets fell by 1 recently. ONE Gas Inc (NYSE:OGS) was in 19 hedge funds’ portfolios at the end of September. The all time high for this statistic is 20. Our calculations also showed that OGS 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). There were 20 hedge funds in our database with OGS positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a glance at the new hedge fund action encompassing ONE Gas Inc (NYSE:OGS).
Do Hedge Funds Think OGS Is A Good Stock To Buy Now?
At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OGS over the last 21 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.
Of the funds tracked by Insider Monkey, Impax Asset Management, managed by Ian Simm, holds the number one position in ONE Gas Inc (NYSE:OGS). Impax Asset Management has a $6.1 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by GAMCO Investors, managed by Mario Gabelli, which holds a $4.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions comprise Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to ONE Gas Inc (NYSE:OGS), around 0.39% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, dishing out 0.19 percent of its 13F equity portfolio to OGS.
Seeing as ONE Gas Inc (NYSE:OGS) has witnessed falling interest from hedge fund managers, logic holds that there was a specific group of funds that decided to sell off their entire stakes in the third quarter. Intriguingly, Noam Gottesman’s GLG Partners dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $3.2 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund sold off about $1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ONE Gas Inc (NYSE:OGS) but similarly valued. These stocks are Pilgrim’s Pride Corporation (NASDAQ:PPC), Varonis Systems Inc (NASDAQ:VRNS), Hawaiian Electric Industries, Inc. (NYSE:HE), BOK Financial Corporation (NASDAQ:BOKF), Devon Energy Corporation (NYSE:DVN), Madison Square Garden Sports Corp. (NYSE:MSGS), and Rayonier Inc. (NYSE:RYN). All of these stocks’ market caps are closest to OGS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $382 million. That figure was $24 million in OGS’s case. Madison Square Garden Sports Corp. (NYSE:MSGS) is the most popular stock in this table. On the other hand Rayonier Inc. (NYSE:RYN) is the least popular one with only 17 bullish hedge fund positions. ONE Gas Inc (NYSE:OGS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OGS is 35.7. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on OGS as the stock returned 16.8% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.