Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Oxford Industries, Inc. (NYSE:OXM).
Oxford Industries, Inc. (NYSE:OXM) was in 9 hedge funds' portfolios at the end of December. OXM has seen a decrease in activity from the world's largest hedge funds of late. There were 13 hedge funds in our database with OXM positions at the end of the previous quarter. Our calculations also showed that OXM isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to check out the new hedge fund action encompassing Oxford Industries, Inc. (NYSE:OXM).
What have hedge funds been doing with Oxford Industries, Inc. (NYSE:OXM)?
At the end of the fourth quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the second quarter of 2018. On the other hand, there were a total of 18 hedge funds with a bullish position in OXM a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Cardinal Capital held the most valuable stake in Oxford Industries, Inc. (NYSE:OXM), which was worth $38.1 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $5.2 million worth of shares. Moreover, Citadel Investment Group, Gotham Asset Management, and Millennium Management were also bullish on Oxford Industries, Inc. (NYSE:OXM), allocating a large percentage of their portfolios to this stock.
Due to the fact that Oxford Industries, Inc. (NYSE:OXM) has faced falling interest from the aggregate hedge fund industry, it's easy to see that there exists a select few funds who were dropping their entire stakes in the third quarter. Interestingly, Jim Simons's Renaissance Technologies dumped the largest investment of the 700 funds watched by Insider Monkey, valued at an estimated $8.8 million in stock. Michael Platt and William Reeves's fund, BlueCrest Capital Mgmt., also dumped its stock, about $3.1 million worth. These moves are interesting, as total hedge fund interest dropped by 4 funds in the third quarter.
Let's go over hedge fund activity in other stocks similar to Oxford Industries, Inc. (NYSE:OXM). These stocks are Vocera Communications Inc (NYSE:VCRA), Knowles Corp (NYSE:KN), First Commonwealth Financial Corporation (NYSE:FCF), and LexinFintech Holdings Ltd. (NASDAQ:LX). This group of stocks' market caps are closest to OXM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VCRA,17,103411,6 KN,24,104079,12 FCF,13,39783,2 LX,4,3570,-4 Average,14.5,62711,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $53 million in OXM's case. Knowles Corp (NYSE:KN) is the most popular stock in this table. On the other hand LexinFintech Holdings Ltd. (NASDAQ:LX) is the least popular one with only 4 bullish hedge fund positions. Oxford Industries, Inc. (NYSE:OXM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately OXM wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); OXM investors were disappointed as the stock returned 13.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.