Hedge Funds Have Never Been This Bullish On OneMain Holdings Inc (OMF)
Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards OneMain Holdings Inc (NYSE:OMF).
Is OneMain Holdings Inc (NYSE:OMF) a worthy investment today? The best stock pickers were in a bullish mood. The number of bullish hedge fund bets moved up by 13 recently. OneMain Holdings Inc (NYSE:OMF) was in 43 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that OMF isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Matthew Lindenbaum of Basswood Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 we're going to review the latest hedge fund action regarding OneMain Holdings Inc (NYSE:OMF).
Do Hedge Funds Think OMF Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from one quarter earlier. By comparison, 34 hedge funds held shares or bullish call options in OMF 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.
Among these funds, Basswood Capital held the most valuable stake in OneMain Holdings Inc (NYSE:OMF), which was worth $141.7 million at the end of the fourth quarter. On the second spot was Miller Value Partners which amassed $127.1 million worth of shares. Parsifal Capital Management, Arrowstreet Capital, and Adage Capital 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 Parsifal Capital Management allocated the biggest weight to OneMain Holdings Inc (NYSE:OMF), around 8.7% of its 13F portfolio. Second Curve Capital is also relatively very bullish on the stock, setting aside 7.49 percent of its 13F equity portfolio to OMF.
Now, specific money managers have jumped into OneMain Holdings Inc (NYSE:OMF) headfirst. Point72 Asset Management, managed by Steve Cohen, established the most valuable position in OneMain Holdings Inc (NYSE:OMF). Point72 Asset Management had $43.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $43.5 million position during the quarter. The following funds were also among the new OMF investors: Steven Tananbaum's GoldenTree Asset Management, Ken Heebner's Capital Growth Management, and Joseph Samuels's Islet Management.
Let's check out hedge fund activity in other stocks similar to OneMain Holdings Inc (NYSE:OMF). We will take a look at Mobile TeleSystems OJSC (NYSE:MBT), Bumble Inc. (NASDAQ:BMBL), Digital Turbine Inc (NASDAQ:APPS), Freshpet Inc (NASDAQ:FRPT), Marriott Vacations Worldwide Corporation (NYSE:VAC), II-VI, Inc. (NASDAQ:IIVI), and Sealed Air Corporation (NYSE:SEE). All of these stocks' market caps are closest to OMF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MBT,11,295926,-2 BMBL,29,545734,29 APPS,22,348515,-1 FRPT,19,209522,-6 VAC,24,604062,3 IIVI,39,267417,13 SEE,27,765215,-5 Average,24.4,433770,4.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $434 million. That figure was $887 million in OMF's case. II-VI, Inc. (NASDAQ:IIVI) is the most popular stock in this table. On the other hand Mobile TeleSystems OJSC (NYSE:MBT) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks OneMain Holdings Inc (NYSE:OMF) is more popular among hedge funds. Our overall hedge fund sentiment score for OMF is 90. 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 17.4% in 2021 through June 18th and still managed to beat the market by 6.1 percentage points. Hedge funds were also right about betting on OMF, though not to the same extent, as the stock returned 6.9% since the end of March (through June 18th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
