Is OI Stock A Buy or Sell?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards O-I Glass, Inc. (NYSE:OI) changed recently.

Is OI stock a buy? O-I Glass, Inc. (NYSE:OI) has experienced a decrease in hedge fund interest in recent months. O-I Glass, Inc. (NYSE:OI) was in 25 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 30. There were 27 hedge funds in our database with OI holdings at the end of September. Our calculations also showed that OI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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 leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Now we’re going to go over the new hedge fund action regarding O-I Glass, Inc. (NYSE:OI).

Do Hedge Funds Think OI Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in OI a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

The largest stake in O-I Glass, Inc. (NYSE:OI) was held by Abrams Capital Management, which reported holding $82.5 million worth of stock at the end of December. It was followed by Lyrical Asset Management with a $74.3 million position. Other investors bullish on the company included Atlantic Investment Management, Arrowstreet Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to O-I Glass, Inc. (NYSE:OI), around 10.63% of its 13F portfolio. Abrams Capital Management is also relatively very bullish on the stock, designating 2.33 percent of its 13F equity portfolio to OI.

Because O-I Glass, Inc. (NYSE:OI) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers who were dropping their full holdings last quarter. Intriguingly, Stephen Mildenhall’s Contrarius Investment Management dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at about $5.4 million in stock. Andrew Kurita’s fund, Kettle Hill Capital Management, also dropped its stock, about $2.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as O-I Glass, Inc. (NYSE:OI) but similarly valued. We will take a look at InterDigital, Inc. (NASDAQ:IDCC), Belden Inc. (NYSE:BDC), Sorrento Therapeutics Inc (NASDAQ:SRNE), Welbilt, Inc. (NYSE:WBT), Air Transport Services Group Inc. (NASDAQ:ATSG), Academy Sports and Outdoors, Inc. (NASDAQ:ASO), and Genmab A/S (NASDAQ:GMAB). All of these stocks’ market caps match OI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.6 hedge funds with bullish positions and the average amount invested in these stocks was $192 million. That figure was $267 million in OI’s case. Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is the most popular stock in this table. On the other hand Sorrento Therapeutics Inc (NASDAQ:SRNE) is the least popular one with only 13 bullish hedge fund positions. O-I Glass, Inc. (NYSE:OI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OI is 74.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on OI as the stock returned 22.1% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.