The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Office Depot Inc (NYSE:ODP).
Is Office Depot Inc (NYSE:ODP) a safe investment right now? Money managers are taking a bullish view. The number of long hedge fund positions went up by 1 in recent months. Our calculations also showed that ODP 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_735677" align="aligncenter" width="400"] Sander Gerber of Hudson Bay 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. 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. Keeping this in mind let's take a look at the latest hedge fund action encompassing Office Depot Inc (NYSE:ODP).
How have hedgies been trading Office Depot Inc (NYSE:ODP)?
Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the fourth quarter of 2019. On the other hand, there were a total of 22 hedge funds with a bullish position in ODP a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Canyon Capital Advisors was the largest shareholder of Office Depot Inc (NYSE:ODP), with a stake worth $45.5 million reported as of the end of September. Trailing Canyon Capital Advisors was Arrowstreet Capital, which amassed a stake valued at $8.6 million. Alta Fundamental Advisers, Millennium Management, and Two Sigma Advisors 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 Alta Fundamental Advisers allocated the biggest weight to Office Depot Inc (NYSE:ODP), around 5.83% of its 13F portfolio. Canyon Capital Advisors is also relatively very bullish on the stock, setting aside 1.61 percent of its 13F equity portfolio to ODP.
Consequently, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, established the most valuable position in Office Depot Inc (NYSE:ODP). Millennium Management had $2.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $1.2 million investment in the stock during the quarter. The other funds with brand new ODP positions are Dmitry Balyasny's Balyasny Asset Management, Sander Gerber's Hudson Bay Capital Management, and Parvinder Thiara's Athanor Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Office Depot Inc (NYSE:ODP) but similarly valued. We will take a look at Scholastic Corp (NASDAQ:SCHL), Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), Stratasys, Ltd. (NASDAQ:SSYS), and Schweitzer-Mauduit International, Inc. (NYSE:SWM). All of these stocks' market caps are closest to ODP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCHL,11,44442,-4 AXNX,22,282163,-1 SSYS,14,60722,-4 SWM,10,25342,-3 Average,14.25,103167,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $70 million in ODP's case. Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) is the most popular stock in this table. On the other hand Schweitzer-Mauduit International, Inc. (NYSE:SWM) is the least popular one with only 10 bullish hedge fund positions. Office Depot Inc (NYSE:ODP) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on ODP as the stock returned 49.4% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.