Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of OneSmart International Education Group Limited (NYSE:ONE).
OneSmart International Education Group Limited (NYSE:ONE) has seen an increase in hedge fund sentiment in recent months. ONE was in 8 hedge funds' portfolios at the end of September. There were 7 hedge funds in our database with ONE holdings at the end of the previous quarter. Our calculations also showed that ONE 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.
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Chase Coleman of Tiger Global[/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 gander at the latest hedge fund action encompassing OneSmart International Education Group Limited (NYSE:ONE).
How have hedgies been trading OneSmart International Education Group Limited (NYSE:ONE)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ONE over the last 17 quarters. 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, Yiheng Capital held the most valuable stake in OneSmart International Education Group Limited (NYSE:ONE), which was worth $36.3 million at the end of the third quarter. On the second spot was Indus Capital which amassed $11.1 million worth of shares. Renaissance Technologies, Tiger Global Management, and Millennium 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 Yiheng Capital allocated the biggest weight to OneSmart International Education Group Limited (NYSE:ONE), around 4.45% of its 13F portfolio. Indus Capital is also relatively very bullish on the stock, designating 1.84 percent of its 13F equity portfolio to ONE.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Marshall Wace, managed by Paul Marshall and Ian Wace, assembled the largest position in Higher One Holdings, Inc (NYSE:ONE). Marshall Wace had $0.1 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as OneSmart International Education Group Limited (NYSE:ONE) but similarly valued. These stocks are United Fire Group, Inc. (NASDAQ:UFCS), Vicor Corporation (NASDAQ:VICR), New Mountain Finance Corporation (NYSE:NMFC), and Radius Health Inc (NASDAQ:RDUS). This group of stocks' market caps are closest to ONE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UFCS,8,13556,-2 VICR,11,15736,-2 NMFC,15,40701,4 RDUS,18,268579,2 Average,13,84643,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $55 million in ONE's case. Radius Health Inc (NASDAQ:RDUS) is the most popular stock in this table. On the other hand United Fire Group, Inc. (NASDAQ:UFCS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks OneSmart International Education Group Limited (NYSE:ONE) is even less popular than UFCS. Hedge funds dodged a bullet by taking a bearish stance towards ONE. 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 ONE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ONE investors were disappointed as the stock returned -3.8% 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.