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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Omega Flex, Inc. (NASDAQ:OFLX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Omega Flex, Inc. (NASDAQ:OFLX) has experienced an increase in enthusiasm from smart money in recent months. OFLX was in 4 hedge funds' portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with OFLX positions at the end of the previous quarter. Our calculations also showed that OFLX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Roger Ibbotson of Zebra Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind we're going to take a look at the latest hedge fund action surrounding Omega Flex, Inc. (NASDAQ:OFLX).
Hedge fund activity in Omega Flex, Inc. (NASDAQ:OFLX)
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OFLX over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Renaissance Technologies has the most valuable position in Omega Flex, Inc. (NASDAQ:OFLX), worth close to $2.7 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Nine Ten Partners, managed by Brian Bares, Russell Mollen, and James Bradshaw, which holds a $2.5 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Roger Ibbotson's Zebra Capital Management, Chuck Royce's Royce & Associates and . In terms of the portfolio weights assigned to each position Nine Ten Partners allocated the biggest weight to Omega Flex, Inc. (NASDAQ:OFLX), around 0.8% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, designating 0.3 percent of its 13F equity portfolio to OFLX.
As industrywide interest jumped, some big names were leading the bulls' herd. Zebra Capital Management, managed by Roger Ibbotson, assembled the biggest position in Omega Flex, Inc. (NASDAQ:OFLX). Zebra Capital Management had $0.3 million invested in the company at the end of the quarter.
Let's now review hedge fund activity in other stocks similar to Omega Flex, Inc. (NASDAQ:OFLX). These stocks are Granite Point Mortgage Trust Inc. (NYSE:GPMT), Chase Corporation (NYSE:CCF), The St. Joe Company (NYSE:JOE), and Encore Capital Group, Inc. (NASDAQ:ECPG). All of these stocks' market caps are similar to OFLX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GPMT,6,13231,-3 CCF,7,86633,-1 JOE,9,503471,-3 ECPG,10,65147,2 Average,8,167121,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $6 million in OFLX's case. Encore Capital Group, Inc. (NASDAQ:ECPG) is the most popular stock in this table. On the other hand Granite Point Mortgage Trust Inc. (NYSE:GPMT) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Omega Flex, Inc. (NASDAQ:OFLX) is even less popular than GPMT. Hedge funds dodged a bullet by taking a bearish stance towards OFLX. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately OFLX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); OFLX investors were disappointed as the stock returned -6.3% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.