The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Oshkosh Corporation (NYSE:OSK) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Oshkosh Corporation (NYSE:OSK) was in 27 hedge funds' portfolios at the end of June. The all time high for this statistics is 30. OSK has experienced an increase in support from the world's most elite money managers recently. There were 22 hedge funds in our database with OSK holdings at the end of March. Our calculations also showed that OSK isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Sander Gerber of Hudson Bay Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. With all of this in mind let's take a peek at the new hedge fund action regarding Oshkosh Corporation (NYSE:OSK).
How have hedgies been trading Oshkosh Corporation (NYSE:OSK)?
At second quarter's end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OSK over the last 20 quarters. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Oshkosh Corporation (NYSE:OSK), which was worth $70.5 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $34.8 million worth of shares. Adage Capital Management, Skylands Capital, and Lodge Hill Capital 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 Lodge Hill Capital allocated the biggest weight to Oshkosh Corporation (NYSE:OSK), around 4.7% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, setting aside 3 percent of its 13F equity portfolio to OSK.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Horizon Asset Management, managed by Murray Stahl, established the most valuable position in Oshkosh Corporation (NYSE:OSK). Horizon Asset Management had $11.9 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $8.8 million position during the quarter. The other funds with brand new OSK positions are Dmitry Balyasny's Balyasny Asset Management, Matthew Hulsizer's PEAK6 Capital Management, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Oshkosh Corporation (NYSE:OSK) but similarly valued. We will take a look at Sasol Limited (NYSE:SSL), Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), The Wendy's Company (NASDAQ:WEN), Marathon Oil Corporation (NYSE:MRO), Jabil Inc. (NYSE:JBL), Woodward Inc (NASDAQ:WWD), and Vir Biotechnology, Inc. (NASDAQ:VIR). This group of stocks' market valuations are closest to OSK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SSL,10,35736,1 AVAL,9,12468,4 WEN,32,1106601,-3 MRO,26,313727,2 JBL,31,375953,11 WWD,21,384120,-3 VIR,7,14975,3 Average,19.4,320511,2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $321 million. That figure was $207 million in OSK's case. The Wendy's Company (NASDAQ:WEN) is the most popular stock in this table. On the other hand Vir Biotechnology, Inc. (NASDAQ:VIR) is the least popular one with only 7 bullish hedge fund positions. Oshkosh Corporation (NYSE:OSK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OSK is 77. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately OSK wasn't nearly as popular as these 10 stocks and hedge funds that were betting on OSK were disappointed as the stock returned 0.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.