Where Do Hedge Funds Stand On Park-Ohio Holdings Corp. (PKOH)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Park-Ohio Holdings Corp. (NASDAQ:PKOH) based on that data.

Is Park-Ohio Holdings Corp. (NASDAQ:PKOH) a bargain? Hedge funds were taking a bearish view. The number of bullish hedge fund positions retreated by 2 recently. Park-Ohio Holdings Corp. (NASDAQ:PKOH) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. Our calculations also showed that PKOH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s take a peek at the fresh hedge fund action regarding Park-Ohio Holdings Corp. (NASDAQ:PKOH).

What does smart money think about Park-Ohio Holdings Corp. (NASDAQ:PKOH)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in PKOH a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Is PKOH A Good Stock To Buy?

Among these funds, GAMCO Investors held the most valuable stake in Park-Ohio Holdings Corp. (NASDAQ:PKOH), which was worth $11.9 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $3.6 million worth of shares. Arrowstreet Capital, Invenomic Capital Management, and D E Shaw 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 Invenomic Capital Management allocated the biggest weight to Park-Ohio Holdings Corp. (NASDAQ:PKOH), around 0.17% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.13 percent of its 13F equity portfolio to PKOH.

Because Park-Ohio Holdings Corp. (NASDAQ:PKOH) has witnessed falling interest from the smart money, logic holds that there exists a select few money managers who sold off their positions entirely in the third quarter. At the top of the heap, Israel Englander’s Millennium Management dropped the biggest investment of the 750 funds monitored by Insider Monkey, valued at an estimated $0.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 2 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Park-Ohio Holdings Corp. (NASDAQ:PKOH). We will take a look at Solar Senior Capital Ltd (NASDAQ:SUNS), DASAN Zhone Solutions, Inc. (NASDAQ:DZSI), Ceragon Networks Ltd. (NASDAQ:CRNT), iCAD Inc (NASDAQ:ICAD), T2 Biosystems Inc (NASDAQ:TTOO), Veritiv Corp (NYSE:VRTV), and WhiteHorse Finance, Inc. (NASDAQ:WHF). This group of stocks’ market caps match PKOH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SUNS 2 1073 0
DZSI 4 10546 -2
CRNT 7 11308 0
ICAD 14 31633 2
TTOO 4 562 0
VRTV 11 52963 1
WHF 3 1895 0
Average 6.4 15711 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $17 million in PKOH’s case. iCAD Inc (NASDAQ:ICAD) is the most popular stock in this table. On the other hand Solar Senior Capital Ltd (NASDAQ:SUNS) is the least popular one with only 2 bullish hedge fund positions. Park-Ohio Holdings Corp. (NASDAQ:PKOH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PKOH is 34.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on PKOH as the stock returned 80.3% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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