In this article you are going to find out whether hedge funds think Oceaneering International (NYSE:OII) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is OII a good stock to buy now? Oceaneering International (NYSE:OII) investors should pay attention to an increase in enthusiasm from smart money in recent months. Oceaneering International (NYSE:OII) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 32. There were 17 hedge funds in our database with OII positions at the end of the second quarter. Our calculations also showed that OII 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.
In the 21st century investor’s toolkit there are plenty of methods shareholders can use to evaluate stocks. A duo of the most useful methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best money managers can outpace their index-focused peers by a solid amount (see the details here).
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 view the key hedge fund action encompassing Oceaneering International (NYSE:OII).
Do Hedge Funds Think OII Is A Good Stock To Buy Now?
At the end of September, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in OII over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Oceaneering International (NYSE:OII), with a stake worth $8.7 million reported as of the end of September. Trailing Fisher Asset Management was D E Shaw, which amassed a stake valued at $8.3 million. Arrowstreet Capital, Two Sigma Advisors, and Balyasny Asset 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 DC Capital Partners allocated the biggest weight to Oceaneering International (NYSE:OII), around 0.6% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, setting aside 0.1 percent of its 13F equity portfolio to OII.
Consequently, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Oceaneering International (NYSE:OII). Balyasny Asset Management had $1.4 million invested in the company at the end of the quarter. Renaissance Technologies also made a $0.8 million investment in the stock during the quarter. The other funds with brand new OII positions are Phill Gross and Robert Atchinson’s Adage Capital Management, Vince Maddi and Shawn Brennan’s SIR Capital Management, and Donald Sussman’s Paloma Partners.
Let’s now review hedge fund activity in other stocks similar to Oceaneering International (NYSE:OII). These stocks are Miller Industries, Inc. (NYSE:MLR), Merus N.V. (NASDAQ:MRUS), Franks International NV (NYSE:FI), Prevail Therapeutics Inc. (NASDAQ:PRVL), Intelligent Systems Corporation (NYSE:INS), Daseke, Inc. (NASDAQ:DSKE), and ANI Pharmaceuticals Inc (NASDAQ:ANIP). This group of stocks’ market values are similar to OII’s market value.
|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 10.3 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $30 million in OII’s case. Merus N.V. (NASDAQ:MRUS) is the most popular stock in this table. On the other hand Intelligent Systems Corporation (NYSE:INS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Oceaneering International (NYSE:OII) is more popular among hedge funds. Our overall hedge fund sentiment score for OII is 72.9. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on OII as the stock returned 134.4% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.