After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Ouster, Inc. (NYSE:OUST).
Is OUST a good stock to buy? Prominent investors were taking an optimistic view. The number of bullish hedge fund bets improved by 19 recently. Ouster, Inc. (NYSE:OUST) was in 19 hedge funds’ portfolios at the end of March. Our calculations also showed that OUST isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Sander Gerber of Hudson Bay Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. Keeping this in mind let’s take a peek at the new hedge fund action regarding Ouster, Inc. (NYSE:OUST).
Do Hedge Funds Think OUST Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19 from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards OUST over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Tao Capital held the most valuable stake in Ouster, Inc. (NYSE:OUST), which was worth $95.7 million at the end of the fourth quarter. On the second spot was Hudson Bay Capital Management which amassed $8.6 million worth of shares. Citadel Investment Group, Ionic Capital Management, and HBK Investments 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 Tao Capital allocated the biggest weight to Ouster, Inc. (NYSE:OUST), around 27.62% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, dishing out 0.47 percent of its 13F equity portfolio to OUST.
With a general bullishness amongst the heavyweights, key money managers have jumped into Ouster, Inc. (NYSE:OUST) headfirst. Tao Capital, managed by Nicholas J. Pritzker, established the most valuable position in Ouster, Inc. (NYSE:OUST). Tao Capital had $95.7 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $8.6 million position during the quarter. The other funds with brand new OUST positions are Ken Griffin’s Citadel Investment Group, Bart Baum’s Ionic Capital Management, and David Costen Haley’s HBK Investments.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ouster, Inc. (NYSE:OUST) but similarly valued. These stocks are 17 Education & Technology Group Inc. (NASDAQ:YQ), Ebang International Holdings Inc. (NASDAQ:EBON), FBL Financial Group (NYSE:FFG), nLIGHT, Inc. (NASDAQ:LASR), Fresh Del Monte Produce Inc (NYSE:FDP), Nexa Resources S.A. (NYSE:NEXA), and StepStone Group Inc. (NASDAQ:STEP). This group of stocks’ market caps are similar to OUST’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YQ | 7 | 7440 | -6 |
| EBON | 8 | 9048 | 5 |
| FFG | 7 | 19941 | -1 |
| LASR | 18 | 82278 | -2 |
| FDP | 4 | 18305 | -1 |
| NEXA | 5 | 6665 | 2 |
| STEP | 13 | 69812 | 5 |
| Average | 8.9 | 30498 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.9 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $130 million in OUST’s case. nLIGHT, Inc. (NASDAQ:LASR) is the most popular stock in this table. On the other hand Fresh Del Monte Produce Inc (NYSE:FDP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Ouster, Inc. (NYSE:OUST) is more popular among hedge funds. Our overall hedge fund sentiment score for OUST is 90. 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 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 returned 23.8% in 2021 through July 16th but still managed to beat the market by 7.7 percentage points. Hedge funds were also right about betting on OUST as the stock returned 27.8% since the end of March (through 7/16) 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.