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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. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Ocwen Financial Corporation (NYSE:OCN) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Ocwen Financial Corporation (NYSE:OCN) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds' portfolios at the end of the second quarter of 2021. Our calculations also showed that OCN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare OCN to other stocks including Laird Superfood, Inc. (NYSE:LSF), BlueCity Holdings Limited (NASDAQ:BLCT), and Platinum Group Metals Limited (NYSE:PLG) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Howard Marks of Oaktree Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let's take a peek at the recent hedge fund action surrounding Ocwen Financial Corporation (NYSE:OCN).
Do Hedge Funds Think OCN Is A Good Stock To Buy Now?
At Q2's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2020. On the other hand, there were a total of 17 hedge funds with a bullish position in OCN a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Oaktree Capital Management held the most valuable stake in Ocwen Financial Corporation (NYSE:OCN), which was worth $18.5 million at the end of the second quarter. On the second spot was Omega Advisors which amassed $14 million worth of shares. Prescott Group Capital Management, D E Shaw, and Two Sigma Advisors 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 Prescott Group Capital Management allocated the biggest weight to Ocwen Financial Corporation (NYSE:OCN), around 2.07% of its 13F portfolio. Omega Advisors is also relatively very bullish on the stock, setting aside 0.79 percent of its 13F equity portfolio to OCN.
Since Ocwen Financial Corporation (NYSE:OCN) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds that elected to cut their entire stakes heading into Q3. It's worth mentioning that Michael Gelband's ExodusPoint Capital dumped the biggest investment of the 750 funds monitored by Insider Monkey, worth close to $0.5 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund dropped about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to Ocwen Financial Corporation (NYSE:OCN). We will take a look at Laird Superfood, Inc. (NYSE:LSF), BlueCity Holdings Limited (NASDAQ:BLCT), Platinum Group Metals Limited (NYSE:PLG), Alico, Inc. (NASDAQ:ALCO), First Bank (NASDAQ:FRBA), Immunic, Inc. (NASDAQ:IMUX), and Willis Lease Finance Corporation (NASDAQ:WLFC). All of these stocks' market caps are closest to OCN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LSF,5,10254,1 BLCT,3,831,1 PLG,5,5180,-1 ALCO,7,11099,1 FRBA,6,8531,1 IMUX,9,17016,0 WLFC,2,16015,0 Average,5.3,9847,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.3 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $49 million in OCN's case. Immunic, Inc. (NASDAQ:IMUX) is the most popular stock in this table. On the other hand Willis Lease Finance Corporation (NASDAQ:WLFC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Ocwen Financial Corporation (NYSE:OCN) is more popular among hedge funds. Our overall hedge fund sentiment score for OCN is 65.7. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Unfortunately OCN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on OCN were disappointed as the stock returned -7.7% since the end of the second quarter (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.