Oceaneering International, Inc. (OII): Hedge Funds In Wait-and-See Mode

In this article we are going to use hedge fund sentiment as a tool and determine whether Oceaneering International, Inc. (NYSE:OII) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Hedge fund interest in Oceaneering International, Inc. (NYSE:OII) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that OII isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare OII to other stocks including RadNet Inc. (NASDAQ:RDNT), Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC), and TransMedics Group, Inc. (NASDAQ:TMDX) to get a better sense of its popularity.

In the eyes of most stock holders, hedge funds are seen as worthless, old investment vehicles of years past. While there are greater than 8000 funds with their doors open at the moment, Our researchers choose to focus on the leaders of this club, approximately 850 funds. These money managers preside over most of the smart money’s total asset base, and by keeping track of their matchless investments, Insider Monkey has discovered various investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Joe Huber - Huber Capital Management

Joe Huber of Huber Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 we’re going to take a look at the recent hedge fund action encompassing Oceaneering International, Inc. (NYSE:OII).

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

Heading into the second quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in OII a year ago. 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 Oceaneering International, Inc. (NYSE:OII) was held by Fisher Asset Management, which reported holding $25.9 million worth of stock at the end of December. It was followed by D E Shaw with a $15.3 million position. Other investors bullish on the company included Renaissance Technologies, Intrinsic Edge Capital, and SIR Capital Management. In terms of the portfolio weights assigned to each position SIR Capital Management allocated the biggest weight to Oceaneering International, Inc. (NYSE:OII), around 1.07% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, dishing out 0.44 percent of its 13F equity portfolio to OII.

Because Oceaneering International, Inc. (NYSE:OII) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds who were dropping their positions entirely in the first quarter. It’s worth mentioning that Peter Muller’s PDT Partners said goodbye to the biggest investment of the 750 funds followed by Insider Monkey, totaling about $1.2 million in stock. Jonathan Soros’s fund, JS Capital, also sold off its stock, about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Oceaneering International, Inc. (NYSE:OII) but similarly valued. These stocks are RadNet Inc. (NASDAQ:RDNT), Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC), TransMedics Group, Inc. (NASDAQ:TMDX), Protagonist Therapeutics, Inc. (NASDAQ:PTGX), Agilysys, Inc. (NASDAQ:AGYS), Meridian Bioscience, Inc. (NASDAQ:VIVO), and GreenSky, Inc. (NASDAQ:GSKY). This group of stocks’ market values match OII’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RDNT 14 76988 2
TRHC 7 10073 3
TMDX 3 14241 -1
PTGX 20 399766 -3
AGYS 13 335316 -4
VIVO 16 123358 -2
GSKY 11 36914 -3
Average 12 142379 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $82 million in OII’s case. Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is the most popular stock in this table. On the other hand TransMedics Group, Inc. (NASDAQ:TMDX) is the least popular one with only 3 bullish hedge fund positions. Oceaneering International, Inc. (NYSE:OII) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OII is 73.8. 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 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on OII, though not to the same extent, as the stock returned 14.4% since Q1 (through July 16th) and outperformed the market as well.

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