Is OceanFirst Financial Corp. (NASDAQ:OCFC) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
OceanFirst Financial Corp. (NASDAQ:OCFC) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds' portfolios at the end of September. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as GreenSky, Inc. (NASDAQ:GSKY), Winnebago Industries, Inc. (NYSE:WGO), and B&G Foods, Inc. (NYSE:BGS) to gather more data points. Our calculations also showed that OCFC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most traders, hedge funds are assumed to be slow, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open at the moment, Our experts hone in on the aristocrats of this group, approximately 750 funds. These hedge fund managers shepherd the majority of the smart money's total capital, and by watching their matchless stock picks, Insider Monkey has found many investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_255015" align="aligncenter" width="450"] Tom Brown of Second Curve Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a peek at the key hedge fund action encompassing OceanFirst Financial Corp. (NASDAQ:OCFC).
What have hedge funds been doing with OceanFirst Financial Corp. (NASDAQ:OCFC)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in OCFC a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of OceanFirst Financial Corp. (NASDAQ:OCFC), with a stake worth $29.4 million reported as of the end of September. Trailing Renaissance Technologies was Driehaus Capital, which amassed a stake valued at $8 million. Millennium Management, Private Capital Management, and Marshall Wace 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 1.28% of its 13F portfolio. Second Curve Capital is also relatively very bullish on the stock, dishing out 1.08 percent of its 13F equity portfolio to OCFC.
Seeing as OceanFirst Financial Corp. (NASDAQ:OCFC) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of hedgies who sold off their positions entirely in the third quarter. It's worth mentioning that Paul Hondros's AlphaOne Capital Partners sold off the biggest position of the "upper crust" of funds watched by Insider Monkey, totaling about $0.9 million in stock, and Chuck Royce's Royce & Associates was right behind this move, as the fund dumped about $0.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over 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 GreenSky, Inc. (NASDAQ:GSKY), Winnebago Industries, Inc. (NYSE:WGO), B&G Foods, Inc. (NYSE:BGS), and Sandy Spring Bancorp Inc. (NASDAQ:SASR). This group of stocks' market caps resemble OCFC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSKY,15,55125,-5 WGO,15,126735,2 BGS,16,134329,-4 SASR,16,86930,1 Average,15.5,100780,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $66 million in OCFC's case. B&G Foods, Inc. (NYSE:BGS) is the most popular stock in this table. On the other hand GreenSky, Inc. (NASDAQ:GSKY) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks OceanFirst Financial Corp. (NASDAQ:OCFC) is even less popular than GSKY. Hedge funds dodged a bullet by taking a bearish stance towards OCFC. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately OCFC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); OCFC investors were disappointed as the stock returned 2.3% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.