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Hedge Funds Aren’t Crazy About OneMain Holdings Inc (OMF) Anymore

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The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards OneMain Holdings Inc (NYSE:OMF).

OneMain Holdings Inc (NYSE:OMF) investors should pay attention to a decrease in hedge fund interest in recent months. OneMain Holdings Inc (NYSE:OMF) was in 41 hedge funds' portfolios at the end of June. The all time high for this statistic is 43. There were 43 hedge funds in our database with OMF positions at the end of the first quarter. Our calculations also showed that OMF isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Matthew Lindenbaum Basswood Capital
Matthew Lindenbaum Basswood Capital

Matthew Lindenbaum of Basswood Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. 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. 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 let's take a glance at the fresh hedge fund action regarding OneMain Holdings Inc (NYSE:OMF).

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

At Q2's end, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards OMF over the last 24 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in OneMain Holdings Inc (NYSE:OMF) was held by Basswood Capital, which reported holding $142.8 million worth of stock at the end of June. It was followed by Miller Value Partners with a $129.9 million position. Other investors bullish on the company included Parsifal Capital Management, Arrowstreet Capital, and GoldenTree Asset Management. In terms of the portfolio weights assigned to each position Parsifal Capital Management allocated the biggest weight to OneMain Holdings Inc (NYSE:OMF), around 10.09% of its 13F portfolio. Second Curve Capital is also relatively very bullish on the stock, dishing out 7.79 percent of its 13F equity portfolio to OMF.

Due to the fact that OneMain Holdings Inc (NYSE:OMF) has faced declining sentiment from hedge fund managers, logic holds that there exists a select few money managers that slashed their entire stakes by the end of the second quarter. Interestingly, Ken Griffin's Citadel Investment Group said goodbye to the largest stake of the "upper crust" of funds watched by Insider Monkey, comprising an estimated $43.5 million in stock. Joseph Samuels's fund, Islet Management, also sold off its stock, about $10.7 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds by the end of the second quarter.

Let's now review hedge fund activity in other stocks similar to OneMain Holdings Inc (NYSE:OMF). We will take a look at Beam Therapeutics Inc. (NASDAQ:BEAM), United Therapeutics Corporation (NASDAQ:UTHR), YETI Holdings, Inc. (NYSE:YETI), Kinross Gold Corporation (NYSE:KGC), Mobile TeleSystems Public Joint Stock Company (NYSE:MBT), Autohome Inc (NYSE:ATHM), and Gentex Corporation (NASDAQ:GNTX). This group of stocks' market values are closest to OMF's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BEAM,21,1771681,3 UTHR,45,2334119,3 YETI,34,282409,4 KGC,28,360274,1 MBT,10,293155,-1 ATHM,16,344855,-2 GNTX,34,440659,-1 Average,26.9,832450,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $832 million. That figure was $995 million in OMF's case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand Mobile TeleSystems Public Joint Stock Company (NYSE:MBT) is the least popular one with only 10 bullish hedge fund positions. OneMain Holdings Inc (NYSE:OMF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OMF is 75.9. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on OMF as the stock returned 1.6% since the end of Q2 (through 10/11) 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.