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 first 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 4.5 years and analyze what the smart money thinks of OceanFirst Financial Corp. (NASDAQ:OCFC) based on that data.
OceanFirst Financial Corp. (NASDAQ:OCFC) investors should be aware of a decrease in enthusiasm from smart money of late. Our calculations also showed that OCFC isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_258232" align="aligncenter" width="393"] Mario Gabelli of GAMCO Investors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's go over the fresh hedge fund action regarding OceanFirst Financial Corp. (NASDAQ:OCFC).
What have hedge funds been doing with OceanFirst Financial Corp. (NASDAQ:OCFC)?
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -40% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in OCFC over the last 18 quarters. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in OceanFirst Financial Corp. (NASDAQ:OCFC), which was worth $16 million at the end of the third quarter. On the second spot was Private Capital Management which amassed $4.3 million worth of shares. Prospector Partners, Citadel Investment Group, 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 Private Capital Management allocated the biggest weight to OceanFirst Financial Corp. (NASDAQ:OCFC), around 1.33% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, dishing out 0.43 percent of its 13F equity portfolio to OCFC.
Seeing as OceanFirst Financial Corp. (NASDAQ:OCFC) has faced falling interest from the smart money, logic holds that there was a specific group of hedgies that elected to cut their positions entirely by the end of the first quarter. Interestingly, Paul Marshall and Ian Wace's Marshall Wace LLP dumped the biggest position of all the hedgies tracked by Insider Monkey, comprising about $6.1 million in stock, and Richard Driehaus's Driehaus Capital was right behind this move, as the fund cut about $3.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds by the end of the first quarter.
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 WESCO International, Inc. (NYSE:WCC), US Ecology Inc. (NASDAQ:ECOL), Sapiens International Corporation N.V. (NASDAQ:SPNS), and Hecla Mining Company (NYSE:HL). All of these stocks' market caps are closest to OCFC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WCC,32,221143,6 ECOL,22,40929,8 SPNS,10,32545,0 HL,15,55117,1 Average,19.75,87434,3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $29 million in OCFC's case. WESCO International, Inc. (NYSE:WCC) is the most popular stock in this table. On the other hand Sapiens International Corporation N.V. (NASDAQ:SPNS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks OceanFirst Financial Corp. (NASDAQ:OCFC) is even less popular than SPNS. Hedge funds dodged a bullet by taking a bearish stance towards OCFC. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but managed to beat the market by 15.9 percentage points. Unfortunately OCFC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); OCFC investors were disappointed as the stock returned 8.7% during the second quarter (through June 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.