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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded OFG Bancorp (NYSE:OFG) based on those filings.
Is OFG a good stock to buy now? The best stock pickers were getting more bullish. The number of bullish hedge fund bets inched up by 1 lately. OFG Bancorp (NYSE:OFG) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 20. Our calculations also showed that OFG isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Bernard Horn of Polaris Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind let's take a gander at the fresh hedge fund action regarding OFG Bancorp (NYSE:OFG).
Do Hedge Funds Think OFG Is A Good Stock To Buy Now?
At Q3's end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the second quarter of 2020. On the other hand, there were a total of 15 hedge funds with a bullish position in OFG a year ago. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in OFG Bancorp (NYSE:OFG), which was worth $6.2 million at the end of the third quarter. On the second spot was Polaris Capital Management which amassed $2.7 million worth of shares. D E Shaw, Renaissance Technologies, and Mendon Capital 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 Mendon Capital Advisors allocated the biggest weight to OFG Bancorp (NYSE:OFG), around 0.55% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, setting aside 0.13 percent of its 13F equity portfolio to OFG.
Now, some big names were leading the bulls' herd. Mendon Capital Advisors, managed by Anton Schutz, established the largest position in OFG Bancorp (NYSE:OFG). Mendon Capital Advisors had $0.9 million invested in the company at the end of the quarter. Peter Algert's Algert Global also initiated a $0.2 million position during the quarter. The other funds with brand new OFG positions are Benjamin A. Smith's Laurion Capital Management and Paul Tudor Jones's Tudor Investment Corp.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as OFG Bancorp (NYSE:OFG) but similarly valued. These stocks are B. Riley Financial, Inc. (NASDAQ:RILY), Pampa Energia S.A. (NYSE:PAM), Century Aluminum Co (NASDAQ:CENX), Denny's Corporation (NASDAQ:DENN), Ebix Inc (NASDAQ:EBIX), Lumber Liquidators Holdings Inc (NYSE:LL), and G-III Apparel Group, Ltd. (NASDAQ:GIII). This group of stocks' market valuations resemble OFG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RILY,19,88617,3 PAM,8,30973,-2 CENX,11,35940,-1 DENN,20,65004,-3 EBIX,13,50750,-4 LL,14,61499,5 GIII,16,45316,6 Average,14.4,54014,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $15 million in OFG's case. Denny's Corporation (NASDAQ:DENN) is the most popular stock in this table. On the other hand Pampa Energia S.A. (NYSE:PAM) is the least popular one with only 8 bullish hedge fund positions. OFG Bancorp (NYSE:OFG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OFG is 40.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on OFG as the stock returned 42.8% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.