Is OMF Stock A Buy or Sell?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on OneMain Holdings Inc (NYSE:OMF).

Is OMF stock a buy? OneMain Holdings Inc (NYSE:OMF) investors should be aware of a decrease in hedge fund sentiment recently. OneMain Holdings Inc (NYSE:OMF) was in 30 hedge funds’ portfolios at the end of the fourth quarter of 2020. 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 Q4 rankings).

To the average investor there are several indicators stock traders employ to appraise publicly traded companies. A pair of the most under-the-radar indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the market by a significant amount (see the details here).

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 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. With all of this in mind we’re going to review the key hedge fund action surrounding OneMain Holdings Inc (NYSE:OMF).

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

At the end of December, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the third quarter of 2020. On the other hand, there were a total of 39 hedge funds with a bullish position in OMF a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

More specifically, Miller Value Partners was the largest shareholder of OneMain Holdings Inc (NYSE:OMF), with a stake worth $116.4 million reported as of the end of December. Trailing Miller Value Partners was Basswood Capital, which amassed a stake valued at $108.8 million. Parsifal Capital Management, Adage Capital Management, and Arrowstreet Capital 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 Second Curve Capital allocated the biggest weight to OneMain Holdings Inc (NYSE:OMF), around 9.44% of its 13F portfolio. Parsifal Capital Management is also relatively very bullish on the stock, setting aside 9.41 percent of its 13F equity portfolio to OMF.

Due to the fact that OneMain Holdings Inc (NYSE:OMF) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that slashed their entire stakes in the fourth quarter. It’s worth mentioning that Alex Lieblong’s Key Colony Management sold off the biggest stake of the 750 funds monitored by Insider Monkey, worth about $57.1 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $14.3 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 3 funds in the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks similar to OneMain Holdings Inc (NYSE:OMF). These stocks are ICL Group Ltd. (NYSE:ICL), Federal Realty Investment Trust (NYSE:FRT), Globus Medical Inc (NYSE:GMED), Alaska Air Group, Inc. (NYSE:ALK), Nutanix, Inc. (NASDAQ:NTNX), Prosperity Bancshares, Inc. (NYSE:PB), and Kohl’s Corporation (NYSE:KSS). This group of stocks’ market caps are closest to OMF’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $414 million. That figure was $655 million in OMF’s case. Kohl’s Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand ICL Group Ltd. (NYSE:ICL) is the least popular one with only 5 bullish hedge fund positions. OneMain Holdings Inc (NYSE:OMF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OMF is 60.8. 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 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on OMF as the stock returned 25.4% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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