With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was Opko Health Inc. (NASDAQ:OPK).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a look at the recent hedge fund action regarding Opko Health Inc. (NASDAQ:OPK).
How are hedge funds trading Opko Health Inc. (NASDAQ:OPK)?
At Q4’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OPK over the last 14 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Millennium Management was the largest shareholder of Opko Health Inc. (NASDAQ:OPK), with a stake worth $4.2 million reported as of the end of December. Trailing Millennium Management was Citadel Investment Group, which amassed a stake valued at $1.4 million. GLG Partners, Tudor Investment Corp, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, established the largest position in Opko Health Inc. (NASDAQ:OPK). Millennium Management had $2.1 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $0.8 million position during the quarter. The following funds were also among the new OPK investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt., John Overdeck and David Siegel’s Two Sigma Advisors, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Opko Health Inc. (NASDAQ:OPK) but similarly valued. We will take a look at Kosmos Energy Ltd (NYSE:KOS), Innoviva, Inc. (NASDAQ:INVA), MSG Networks Inc (NYSE:MSGN), and Oasis Petroleum Inc. (NYSE:OAS). This group of stocks’ market valuations are similar to OPK’s market valuation.
|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 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $6 million in OPK’s case. Oasis Petroleum Inc. (NYSE:OAS) is the most popular stock in this table. On the other hand Kosmos Energy Ltd (NYSE:KOS) is the least popular one with only 14 bullish hedge fund positions. Opko Health Inc. (NASDAQ:OPK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately OPK wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); OPK investors were disappointed as the stock returned -22.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.