Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Oil States International, Inc. (NYSE:OIS).
Is OIS a good stock to buy now? Oil States International, Inc. (NYSE:OIS) shareholders have witnessed a decrease in enthusiasm from smart money of late. Oil States International, Inc. (NYSE:OIS) was in 12 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 18. There were 13 hedge funds in our database with OIS positions at the end of the second quarter. Our calculations also showed that OIS 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely 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. With all of this in mind we’re going to view the fresh hedge fund action regarding Oil States International, Inc. (NYSE:OIS).
Do Hedge Funds Think OIS Is A Good Stock To Buy Now?
At third quarter’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OIS over the last 21 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in Oil States International, Inc. (NYSE:OIS), which was worth $2.6 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $2.4 million worth of shares. Valueworks LLC, Two Sigma Advisors, and Millennium 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 Valueworks LLC allocated the biggest weight to Oil States International, Inc. (NYSE:OIS), around 1.08% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to OIS.
Seeing as Oil States International, Inc. (NYSE:OIS) has faced declining sentiment from the smart money, logic holds that there was a specific group of funds that slashed their positions entirely by the end of the third quarter. At the top of the heap, Howard Marks’s Oaktree Capital Management dumped the largest stake of the 750 funds watched by Insider Monkey, comprising an estimated $4.1 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dumped its stock, about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks similar to Oil States International, Inc. (NYSE:OIS). We will take a look at Sol-Gel Technologies Ltd. (NASDAQ:SLGL), Universal Technical Institute, Inc. (NYSE:UTI), Eton Pharmaceuticals, Inc. (NASDAQ:ETON), Grupo Supervielle S.A. (NYSE:SUPV), GP Strategies Corporation (NYSE:GPX), National Bankshares Inc. (NASDAQ:NKSH), and Jiayin Group Inc. (NASDAQ:JFIN). All of these stocks’ market caps are closest to OIS’s market cap.
|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 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $10 million in OIS’s case. Universal Technical Institute, Inc. (NYSE:UTI) is the most popular stock in this table. On the other hand Jiayin Group Inc. (NASDAQ:JFIN) is the least popular one with only 1 bullish hedge fund positions. Oil States International, Inc. (NYSE:OIS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OIS is 66.3. 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 beat the market by 16.2 percentage points. Hedge funds were also right about betting on OIS as the stock returned 90.8% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.