The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded OneMain Holdings Inc (NYSE:OMF) based on those filings.
Is OMF a good stock to buy? OneMain Holdings Inc (NYSE:OMF) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. OneMain Holdings Inc (NYSE:OMF) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. Our calculations also showed that OMF 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 many gauges investors use to size up publicly traded companies. A duo of the less utilized gauges are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the elite fund managers can beat their index-focused peers by a healthy margin (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 let’s view the key hedge fund action surrounding OneMain Holdings Inc (NYSE:OMF).
Do Hedge Funds Think OMF Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in OMF over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in OneMain Holdings Inc (NYSE:OMF) was held by Basswood Capital, which reported holding $83.4 million worth of stock at the end of September. It was followed by Miller Value Partners with a $75.2 million position. Other investors bullish on the company included Key Colony Management, Adage Capital Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Key Colony Management allocated the biggest weight to OneMain Holdings Inc (NYSE:OMF), around 93.01% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, designating 6.92 percent of its 13F equity portfolio to OMF.
Judging by the fact that OneMain Holdings Inc (NYSE:OMF) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds who were dropping their full holdings heading into Q4. Intriguingly, Stanley Druckenmiller’s Duquesne Capital dropped the biggest position of all the hedgies monitored by Insider Monkey, totaling an estimated $5.1 million in stock. Brandon Haley’s fund, Holocene Advisors, also dumped its stock, about $1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 4 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as OneMain Holdings Inc (NYSE:OMF) but similarly valued. These stocks are MAXIMUS, Inc. (NYSE:MMS), DouYu International Holdings Limited (NASDAQ:DOYU), Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), MorphoSys AG (NASDAQ:MOR), Essent Group Ltd (NYSE:ESNT), Meritage Homes Corp (NYSE:MTH), and Neogen Corporation (NASDAQ:NEOG). This group of stocks’ market values are similar to OMF’s market value.
|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 17 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $471 million in OMF’s case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand MorphoSys AG (NASDAQ:MOR) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks OneMain Holdings Inc (NYSE:OMF) is more popular among hedge funds. Our overall hedge fund sentiment score for OMF is 76.4. 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 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on OMF as the stock returned 46.7% since the end of September (through 12/18) 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.
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Disclosure: None. This article was originally published at Insider Monkey.