OceanFirst Financial Corp. (OCFC): Are Hedge Funds Right About This Stock?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of OceanFirst Financial Corp. (NASDAQ:OCFC).

OceanFirst Financial Corp. (NASDAQ:OCFC) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that ocfc isn’t among the 30 most popular stocks among hedge funds.

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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Driehaus

We’re going to take a look at the fresh hedge fund action encompassing OceanFirst Financial Corp. (NASDAQ:OCFC).

How are hedge funds trading OceanFirst Financial Corp. (NASDAQ:OCFC)?

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OCFC over the last 13 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

No of Hedge Funds with OCFC Positions

Among these funds, Renaissance Technologies held the most valuable stake in OceanFirst Financial Corp. (NASDAQ:OCFC), which was worth $37.2 million at the end of the third quarter. On the second spot was Private Capital Management which amassed $9.4 million worth of shares. Moreover, Mendon Capital Advisors, Driehaus Capital, and AlphaOne Capital Partners were also bullish on OceanFirst Financial Corp. (NASDAQ:OCFC), allocating a large percentage of their portfolios to this stock.

Now, key money managers were leading the bulls’ herd. HBK Investments, managed by David Costen Haley, initiated the most valuable position in OceanFirst Financial Corp. (NASDAQ:OCFC). HBK Investments had $0.4 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $0.3 million position during the quarter. The only other fund with a brand new OCFC position is Brandon Haley’s Holocene Advisors.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as OceanFirst Financial Corp. (NASDAQ:OCFC) but similarly valued. We will take a look at Party City Holdco Inc (NYSE:PRTY), State Auto Financial Corporation (NASDAQ:STFC), Sykes Enterprises, Incorporated (NASDAQ:SYKE), and BlackRock Credit Allocation Income Trust (NYSE:BTZ). This group of stocks’ market values resemble OCFC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PRTY 18 118672 1
STFC 3 15345 0
SYKE 16 51727 3
BTZ 3 12330 0
Average 10 49519 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $91 million in OCFC’s case. Party City Holdco Inc (NYSE:PRTY) is the most popular stock in this table. On the other hand State Auto Financial Corporation (NASDAQ:STFC) is the least popular one with only 3 bullish hedge fund positions. OceanFirst Financial Corp. (NASDAQ:OCFC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PRTY might be a better candidate to consider a long position.

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