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 Oshkosh Corporation (NYSE:OSK), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Oshkosh Corporation (NYSE:OSK) a cheap investment right now? Hedge funds are becoming less confident. The number of bullish hedge fund bets dropped by 2 lately. Our calculations also showed that OSK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). OSK was in 22 hedge funds' portfolios at the end of the third quarter of 2019. There were 24 hedge funds in our database with OSK positions at the end of the previous quarter. 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.
[caption id="attachment_30600" align="aligncenter" width="600"] Bruce Kovner of Caxton Associates LP[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a look at the latest hedge fund action encompassing Oshkosh Corporation (NYSE:OSK).
How are hedge funds trading Oshkosh Corporation (NYSE:OSK)?
Heading into the fourth quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OSK over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Oshkosh Corporation (NYSE:OSK), with a stake worth $158.2 million reported as of the end of September. Trailing AQR Capital Management was Citadel Investment Group, which amassed a stake valued at $76.8 million. Arrowstreet Capital, Atlantic Investment Management, and Holocene 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 Atlantic Investment Management allocated the biggest weight to Oshkosh Corporation (NYSE:OSK), around 11.35% of its 13F portfolio. Lodge Hill Capital is also relatively very bullish on the stock, setting aside 5.29 percent of its 13F equity portfolio to OSK.
Due to the fact that Oshkosh Corporation (NYSE:OSK) has experienced falling interest from the smart money, we can see that there were a few money managers who were dropping their positions entirely heading into Q4. At the top of the heap, Robert Polak's Anchor Bolt Capital said goodbye to the biggest investment of the 750 funds tracked by Insider Monkey, valued at close to $10.7 million in stock, and Lee Ainslie's Maverick Capital was right behind this move, as the fund cut about $3.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Oshkosh Corporation (NYSE:OSK) but similarly valued. We will take a look at Paylocity Holding Corp (NASDAQ:PCTY), Hudson Pacific Properties Inc (NYSE:HPP), HUYA Inc. (NYSE:HUYA), and Clarivate Analytics Plc (NYSE:CCC). This group of stocks' market caps match OSK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PCTY,25,313646,-3 HPP,24,260095,7 HUYA,21,361903,-1 CCC,38,686023,17 Average,27,405417,5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $405 million. That figure was $435 million in OSK's case. Clarivate Analytics Plc (NYSE:CCC) is the most popular stock in this table. On the other hand HUYA Inc. (NYSE:HUYA) is the least popular one with only 21 bullish hedge fund positions. Oshkosh Corporation (NYSE:OSK) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on OSK as the stock returned 19.7% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.