We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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. Insider Monkey finished processing 835 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2019. In this article we are going to take a look at smart money sentiment towards Oshkosh Corporation (NYSE:OSK).
Is Oshkosh Corporation (NYSE:OSK) going to take off soon? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund positions increased by 2 in recent months. Our calculations also showed that OSK isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). OSK was in 28 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 26 hedge funds in our database with OSK holdings at the end of the previous quarter.
At the moment there are a large number of metrics stock market investors employ to value publicly traded companies. A duo of the most under-the-radar metrics are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite investment managers can outclass their index-focused peers by a significant amount (see the details here).
[caption id="attachment_189632" align="aligncenter" width="399"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. With all of this in mind let's take a gander at the fresh hedge fund action encompassing Oshkosh Corporation (NYSE:OSK).
How have hedgies been trading Oshkosh Corporation (NYSE:OSK)?
Heading into the first quarter of 2020, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the third quarter of 2019. On the other hand, there were a total of 29 hedge funds with a bullish position in OSK a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Oshkosh Corporation (NYSE:OSK), with a stake worth $206.4 million reported as of the end of September. Trailing AQR Capital Management was Arrowstreet Capital, which amassed a stake valued at $36.4 million. GLG Partners, Two Sigma Advisors, and Skylands 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 3.35% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, setting aside 3.22 percent of its 13F equity portfolio to OSK.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Winton Capital Management, managed by David Harding, established the biggest position in Oshkosh Corporation (NYSE:OSK). Winton Capital Management had $8.7 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $7 million position during the quarter. The other funds with brand new OSK positions are Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, Javier Velazquez's Albar Capital, and Louis Bacon's Moore Global Investments.
Let's check out 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 Brixmor Property Group Inc (NYSE:BRX), InterXion Holding NV (NYSE:INXN), Flex Ltd. (NASDAQ:FLEX), and Jefferies Financial Group Inc. (NYSE:JEF). This group of stocks' market caps match OSK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRX,16,147201,-1 INXN,60,1328786,27 FLEX,34,1581224,0 JEF,31,720328,-3 Average,35.25,944385,5.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.25 hedge funds with bullish positions and the average amount invested in these stocks was $944 million. That figure was $407 million in OSK's case. InterXion Holding NV (NYSE:INXN) is the most popular stock in this table. On the other hand Brixmor Property Group Inc (NYSE:BRX) is the least popular one with only 16 bullish hedge fund positions. Oshkosh Corporation (NYSE:OSK) 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately OSK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OSK investors were disappointed as the stock returned -43% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.