Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Oil States International, Inc. (NYSE:OIS).
Oil States International, Inc. (NYSE:OIS) investors should pay attention to an increase in enthusiasm from smart money recently. OIS was in 11 hedge funds' portfolios at the end of the third quarter of 2018. There were 9 hedge funds in our database with OIS positions at the end of the previous quarter. Our calculations also showed that ois isn't among the 30 most popular stocks among hedge funds.
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 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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's review the recent hedge fund action surrounding Oil States International, Inc. (NYSE:OIS).
How have hedgies been trading Oil States International, Inc. (NYSE:OIS)?
At Q3's end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the second quarter of 2018. On the other hand, there were a total of 8 hedge funds with a bullish position in OIS at the beginning of this year. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Oil States International, Inc. (NYSE:OIS) was held by Royce & Associates, which reported holding $10.5 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $8.1 million position. Other investors bullish on the company included Arrowgrass Capital Partners, D E Shaw, and Point72 Asset Management.
As one would reasonably expect, key money managers were leading the bulls' herd. Point72 Asset Management, managed by Steve Cohen, initiated the largest position in Oil States International, Inc. (NYSE:OIS). Point72 Asset Management had $3.3 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves's BlueCrest Capital Mgmt., Benjamin A. Smith's Laurion Capital Management, and Mike Vranos's Ellington.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Oil States International, Inc. (NYSE:OIS) but similarly valued. We will take a look at 8x8, Inc. (NYSE:EGHT), AAON, Inc. (NASDAQ:AAON), Extraction Oil & Gas, Inc. (NASDAQ:XOG), and First Bancorp (NYSE:FBP). All of these stocks' market caps resemble OIS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGHT,18,155881,0 AAON,5,7080,0 XOG,20,289200,-1 FBP,18,256853,2 Average,15.25,177254,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $38 million in OIS's case. Extraction Oil & Gas, Inc. (NASDAQ:XOG) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 5 bullish hedge fund positions. Oil States International, Inc. (NYSE:OIS) 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. In this regard XOG might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.