How do we determine whether OGE Energy Corp. (NYSE:OGE) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is OGE Energy Corp. (NYSE:OGE) a good investment now? Prominent investors are getting more bullish. The number of bullish hedge fund bets inched up by 3 lately. Our calculations also showed that OGE 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.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/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 look at the recent hedge fund action surrounding OGE Energy Corp. (NYSE:OGE).
What does smart money think about OGE Energy Corp. (NYSE:OGE)?
At Q3's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OGE over the last 17 quarters. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in OGE Energy Corp. (NYSE:OGE) was held by Renaissance Technologies, which reported holding $58.2 million worth of stock at the end of September. It was followed by AQR Capital Management with a $31.9 million position. Other investors bullish on the company included Millennium Management, GLG Partners, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Point72 Asset Management allocated the biggest weight to OGE Energy Corp. (NYSE:OGE), around 0.12% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, designating 0.1 percent of its 13F equity portfolio to OGE.
As one would reasonably expect, specific money managers were leading the bulls' herd. D E Shaw, managed by David E. Shaw, assembled the largest position in OGE Energy Corp. (NYSE:OGE). D E Shaw had $9.1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $3 million position during the quarter. The other funds with brand new OGE positions are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Donald Sussman's Paloma Partners, and David Harding's Winton Capital Management.
Let's go over hedge fund activity in other stocks similar to OGE Energy Corp. (NYSE:OGE). We will take a look at US Foods Holding Corp. (NYSE:USFD), Amdocs Limited (NASDAQ:DOX), CyrusOne Inc (NASDAQ:CONE), and SEI Investments Company (NASDAQ:SEIC). This group of stocks' market values match OGE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USFD,42,1269520,3 DOX,23,621074,-2 CONE,21,314844,3 SEIC,23,390443,1 Average,27.25,648970,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $649 million. That figure was $202 million in OGE's case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand CyrusOne Inc (NASDAQ:CONE) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks OGE Energy Corp. (NYSE:OGE) is even less popular than CONE. Hedge funds dodged a bullet by taking a bearish stance towards OGE. 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 OGE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); OGE investors were disappointed as the stock returned -6.5% 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.