Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of OGE Energy Corp. (NYSE:OGE).
OGE Energy Corp. (NYSE:OGE) investors should be aware of an increase in activity from the world's largest hedge funds recently. OGE was in 21 hedge funds' portfolios at the end of March. There were 17 hedge funds in our database with OGE positions at the end of the previous quarter. Our calculations also showed that OGE 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_255014" align="aligncenter" width="397"] Clint Carlson of Carlson Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to check out the fresh hedge fund action surrounding OGE Energy Corp. (NYSE:OGE).
What does smart money think about OGE Energy Corp. (NYSE:OGE)?
Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the fourth quarter of 2019. By comparison, 17 hedge funds held shares or bullish call options in OGE a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the most valuable position in OGE Energy Corp. (NYSE:OGE). Renaissance Technologies has a $61.5 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Phill Gross and Robert Atchinson of Adage Capital Management, with a $29.2 million position; 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain Israel Englander's Millennium Management, D. E. Shaw's D E Shaw and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Centenus Global Management allocated the biggest weight to OGE Energy Corp. (NYSE:OGE), around 0.8% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, designating 0.76 percent of its 13F equity portfolio to OGE.
As aggregate interest increased, key hedge funds have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the most outsized position in OGE Energy Corp. (NYSE:OGE). Adage Capital Management had $29.2 million invested in the company at the end of the quarter. Clint Carlson's Carlson Capital also made a $14.8 million investment in the stock during the quarter. The other funds with brand new OGE positions are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Paul Tudor Jones's Tudor Investment Corp, and Sara Nainzadeh's Centenus Global Management.
Let's also examine hedge fund activity in other stocks similar to OGE Energy Corp. (NYSE:OGE). These stocks are A. O. Smith Corporation (NYSE:AOS), Ciena Corporation (NYSE:CIEN), Reynolds Consumer Products Inc. (NASDAQ:REYN), and Textron Inc. (NYSE:TXT). This group of stocks' market valuations match OGE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AOS,25,363596,-1 CIEN,31,301426,-4 REYN,17,267945,17 TXT,22,230265,-8 Average,23.75,290808,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $291 million. That figure was $216 million in OGE's case. Ciena Corporation (NYSE:CIEN) is the most popular stock in this table. On the other hand Reynolds Consumer Products Inc. (NASDAQ:REYN) is the least popular one with only 17 bullish hedge fund positions. OGE Energy Corp. (NYSE:OGE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately OGE wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); OGE investors were disappointed as the stock returned 2.1% during the second quarter 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.