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Did Hedge Funds Catch A Break With Oshkosh Corporation (OSK)?

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How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Oshkosh Corporation (NYSE:OSK) and determine whether hedge funds had an edge regarding this stock.

Is Oshkosh Corporation (NYSE:OSK) going to take off soon? The best stock pickers were taking a bullish view. The number of bullish hedge fund bets advanced by 3 lately. Oshkosh Corporation (NYSE:OSK) was in 31 hedge funds' portfolios at the end of September. The all time high for this statistic is 40. Our calculations also showed that OSK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind we're going to go over the fresh hedge fund action encompassing Oshkosh Corporation (NYSE:OSK).

TUDOR INVESTMENT CORP
TUDOR INVESTMENT CORP

Paul Tudor Jones of Tudor Investment Corp

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

Heading into the fourth quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in OSK a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, AQR Capital Management held the most valuable stake in Oshkosh Corporation (NYSE:OSK), which was worth $74.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $29.4 million worth of shares. Renaissance Technologies, Skylands Capital, and Horizon Asset Management 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 Lodge Hill Capital allocated the biggest weight to Oshkosh Corporation (NYSE:OSK), around 4.2% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, earmarking 2.7 percent of its 13F equity portfolio to OSK.

As one would reasonably expect, some big names have jumped into Oshkosh Corporation (NYSE:OSK) headfirst. Renaissance Technologies, assembled the most valuable position in Oshkosh Corporation (NYSE:OSK). Renaissance Technologies had $26.3 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also made a $10.2 million investment in the stock during the quarter. The following funds were also among the new OSK investors: Paul Tudor Jones's Tudor Investment Corp, Paul Marshall and Ian Wace's Marshall Wace LLP, and Alec Litowitz and Ross Laser's Magnetar Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Oshkosh Corporation (NYSE:OSK) but similarly valued. These stocks are BridgeBio Pharma, Inc. (NASDAQ:BBIO), Post Holdings Inc (NYSE:POST), Macy's, Inc. (NYSE:M), Casey's General Stores, Inc. (NASDAQ:CASY), Voya Financial Inc (NYSE:VOYA), Woori Financial Group Inc. (NYSE:WF), and Chart Industries, Inc. (NYSE:GTLS). This group of stocks' market caps are similar to OSK's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BBIO,28,2118607,1 POST,27,1433693,-4 M,41,1478930,6 CASY,22,211044,-2 VOYA,35,968117,-9 WF,2,3608,0 GTLS,22,350268,-5 Average,25.3,937752,-1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $938 million. That figure was $264 million in OSK's case. Macy's, Inc. (NYSE:M) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 2 bullish hedge fund positions. Oshkosh Corporation (NYSE:OSK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OSK is 68.4. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on OSK as the stock returned 11.5% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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