Is Owens Corning (NYSE:OC) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the latest market-moving information.
Owens Corning (NYSE:OC) was in 35 hedge funds’ portfolios at the end of the third quarter of 2016. OC shareholders have witnessed an increase in support from the world’s most elite money managers recently. There were 34 hedge funds in our database with OC positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Sensata Technologies Holding N.V. (NYSE:ST), Macquarie Infrastructure Company LLC (NYSE:MIC), and United Rentals, Inc. (NYSE:URI) to gather more data points.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
With all of this in mind, we’re going to take a gander at the key action encompassing Owens Corning (NYSE:OC).
What does the smart money think about Owens Corning (NYSE:OC)?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a modest increase of 3% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Cohen and Harold Levy’s Iridian Asset Management has the most valuable position in Owens Corning (NYSE:OC), worth close to $257.3 million and comprising 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is Greenhaven Associates, managed by Edgar Wachenheim, which holds a $172.5 million position; 3.3% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish contain Cliff Asness’s AQR Capital Management, David Tepper’s Appaloosa Management LP and Paul Reeder and Edward Shapiro’s PAR Capital Management.
As one would reasonably expect, key money managers have been driving this bullishness. GLG Partners, managed by Noam Gottesman, assembled the most valuable position in Owens Corning (NYSE:OC). The fund had $7.8 million invested in the company at the end of the quarter. Charles Davidson’s Wexford Capital also initiated a $2.1 million position during the quarter. The other funds with brand new OC positions are Ken Griffin’s Citadel Investment Group, Brian Taylor’s Pine River Capital Management, and Ray Carroll’s Breton Hill Capital.
Let’s now review hedge fund activity in other stocks similar to Owens Corning (NYSE:OC). These stocks are Sensata Technologies Holding N.V. (NYSE:ST), Macquarie Infrastructure Company LLC (NYSE:MIC), United Rentals, Inc. (NYSE:URI), and STERIS Corp (NYSE:STE). This group of stocks’ market caps are similar to OC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $905 million. That figure was approximately $1.2 million in OC’s case. Macquarie Infrastructure Company LLC (NYSE:MIC) is the most popular stock in this table. On the other hand STERIS Corp (NYSE:STE) is the least popular one with only 22 bullish hedge fund positions. Owens Corning (NYSE:OC) 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 MIC might be a better candidate to consider a long position.