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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 Oppenheimer Holdings Inc. (NYSE:OPY) based on those filings.
Is OPY a good stock to buy now? Hedge funds were turning bullish. The number of long hedge fund positions went up by 2 recently. Oppenheimer Holdings Inc. (NYSE:OPY) was in 10 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. Our calculations also showed that OPY 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). There were 8 hedge funds in our database with OPY holdings at the end of June.
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 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 S&P 500 ETFs by 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 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.
Cliff Asness of AQR 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. Keeping this in mind let's take a gander at the key hedge fund action surrounding Oppenheimer Holdings Inc. (NYSE:OPY).
Do Hedge Funds Think OPY Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OPY over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Oppenheimer Holdings Inc. (NYSE:OPY) was held by Renaissance Technologies, which reported holding $6.5 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $3.8 million position. Other investors bullish on the company included GLG Partners, AQR Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Oppenheimer Holdings Inc. (NYSE:OPY), around 0.03% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to OPY.
As one would reasonably expect, key hedge funds have jumped into Oppenheimer Holdings Inc. (NYSE:OPY) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Oppenheimer Holdings Inc. (NYSE:OPY). Marshall Wace LLP had $0.4 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also made a $0.3 million investment in the stock during the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Oppenheimer Holdings Inc. (NYSE:OPY) but similarly valued. These stocks are Powell Industries, Inc. (NASDAQ:POWL), Jounce Therapeutics, Inc. (NASDAQ:JNCE), Mesabi Trust (NYSE:MSB), VYNE Therapeutics Inc. (NASDAQ:VYNE), Diamond S Shipping Inc. (NYSE:DSSI), EZCORP Inc (NASDAQ:EZPW), and Surface Oncology, Inc. (NASDAQ:SURF). All of these stocks' market caps are similar to OPY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position POWL,13,27224,0 JNCE,12,14074,0 MSB,5,37474,0 VYNE,10,54821,-4 DSSI,15,19678,-1 EZPW,15,56333,0 SURF,13,56704,2 Average,11.9,38044,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $20 million in OPY's case. Diamond S Shipping Inc. (NYSE:DSSI) is the most popular stock in this table. On the other hand Mesabi Trust (NYSE:MSB) is the least popular one with only 5 bullish hedge fund positions. Oppenheimer Holdings Inc. (NYSE:OPY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OPY is 59.3. 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 OPY as the stock returned 37.8% 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.