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Is Owens-Illinois Inc (OI) A Good Stock To Buy According To Hedge Funds?

Nina Todic

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Owens-Illinois Inc (NYSE:OI).

Owens-Illinois Inc (NYSE:OI) investors should be aware of an increase in support from the world's most elite money managers of late. OI was in 21 hedge funds' portfolios at the end of December. There were 17 hedge funds in our database with OI positions at the end of the previous quarter. Our calculations also showed that oi isn't among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Harding

Let's go over the latest hedge fund action regarding Owens-Illinois Inc (NYSE:OI).

How have hedgies been trading Owens-Illinois Inc (NYSE:OI)?

Heading into the first quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OI over the last 14 quarters. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

No of Hedge Funds With OI Positions

Among these funds, First Pacific Advisors LLC held the most valuable stake in Owens-Illinois Inc (NYSE:OI), which was worth $172.9 million at the end of the third quarter. On the second spot was Atlantic Investment Management which amassed $124.7 million worth of shares. Moreover, AQR Capital Management, Winton Capital Management, and Millennium Management were also bullish on Owens-Illinois Inc (NYSE:OI), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, some big names have jumped into Owens-Illinois Inc (NYSE:OI) headfirst. Winton Capital Management, managed by David Harding, created the most outsized position in Owens-Illinois Inc (NYSE:OI). Winton Capital Management had $10.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also made a $0.8 million investment in the stock during the quarter. The following funds were also among the new OI investors: Ray Dalio's Bridgewater Associates, Jeffrey Talpins's Element Capital Management, and John Overdeck and David Siegel's Two Sigma Advisors.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Owens-Illinois Inc (NYSE:OI) but similarly valued. We will take a look at CommVault Systems, Inc. (NASDAQ:CVLT), Rexford Industrial Realty Inc (NYSE:REXR), National General Holdings Corp (NASDAQ:NGHC), and Kennametal Inc. (NYSE:KMT). This group of stocks' market valuations match OI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVLT,23,359636,1 REXR,18,284812,5 NGHC,16,219095,5 KMT,21,275426,0 Average,19.5,284742,2.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $351 million in OI's case. CommVault Systems, Inc. (NASDAQ:CVLT) is the most popular stock in this table. On the other hand National General Holdings Corp (NASDAQ:NGHC) is the least popular one with only 16 bullish hedge fund positions. Owens-Illinois Inc (NYSE:OI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately OI wasn't nearly as popular as these 15 stock and hedge funds that were betting on OI were disappointed as the stock returned 11.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

Disclosure: None. This article was originally published at Insider Monkey.

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