With the first-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 second quarter of 2021. One of these stocks was Oscar Health, Inc. (NYSE:OSCR).
Is OSCR a good stock to buy? Prominent investors were becoming more confident. The number of long hedge fund positions advanced by 26 recently. Oscar Health, Inc. (NYSE:OSCR) was in 26 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that OSCR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to analyze the key hedge fund action encompassing Oscar Health, Inc. (NYSE:OSCR).
Do Hedge Funds Think OSCR Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26 from the previous quarter. The graph below displays the number of hedge funds with bullish position in OSCR over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Oscar Health, Inc. (NYSE:OSCR) was held by Thrive Capital, which reported holding $883.3 million worth of stock at the end of December. It was followed by Coatue Management with a $170 million position. Other investors bullish on the company included Tiger Global Management LLC, XN Exponent Advisors, and Luminus Management. In terms of the portfolio weights assigned to each position Thrive Capital allocated the biggest weight to Oscar Health, Inc. (NYSE:OSCR), around 64.71% of its 13F portfolio. General Equity Partners is also relatively very bullish on the stock, designating 5.59 percent of its 13F equity portfolio to OSCR.
As one would reasonably expect, some big names were breaking ground themselves. Thrive Capital, managed by Joshua Kushner, established the most valuable position in Oscar Health, Inc. (NYSE:OSCR). Thrive Capital had $883.3 million invested in the company at the end of the quarter. Philippe Laffont’s Coatue Management also made a $170 million investment in the stock during the quarter. The other funds with brand new OSCR positions are Chase Coleman’s Tiger Global Management LLC, Gaurav Kapadia’s XN Exponent Advisors, and Jonathan Barrett and Paul Segal’s Luminus Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Oscar Health, Inc. (NYSE:OSCR) but similarly valued. These stocks are EQT Corporation (NYSE:EQT), Chart Industries, Inc. (NYSE:GTLS), CMC Materials, Inc. (NASDAQ:CCMP), CoreSite Realty Corp (NYSE:COR), The Descartes Systems Group Inc (NASDAQ:DSGX), TriNet Group Inc (NYSE:TNET), and Helen of Troy Limited (NASDAQ:HELE). This group of stocks’ market values are similar to OSCR’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 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $295 million. That figure was $1337 million in OSCR’s case. EQT Corporation (NYSE:EQT) is the most popular stock in this table. On the other hand The Descartes Systems Group Inc (NASDAQ:DSGX) is the least popular one with only 11 bullish hedge fund positions. Oscar Health, Inc. (NYSE:OSCR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OSCR is 60. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately OSCR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OSCR were disappointed as the stock returned -27.1% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.