We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Oxford Industries, Inc. (NYSE:OXM) and determine whether hedge funds skillfully traded this stock.
Oxford Industries, Inc. (NYSE:OXM) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds' portfolios at the end of March. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Bloom Energy Corporation (NYSE:BE), Cara Therapeutics Inc (NASDAQ:CARA), and Simulations Plus, Inc. (NASDAQ:SLP) to gather more data points. Our calculations also showed that OXM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). 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 58 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.
[caption id="attachment_845793" align="aligncenter" width="398"] Peter Rathjens of Arrowstreet Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to view the fresh hedge fund action regarding Oxford Industries, Inc. (NYSE:OXM).
What have hedge funds been doing with Oxford Industries, Inc. (NYSE:OXM)?
Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in OXM a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Cardinal Capital, managed by Amy Minella, holds the number one position in Oxford Industries, Inc. (NYSE:OXM). Cardinal Capital has a $22.1 million position in the stock, comprising 1.1% of its 13F portfolio. Coming of Renaissance Technologies, with a $1.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include Israel Englander's Millennium Management, Greg Eisner's Engineers Gate Manager and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to Oxford Industries, Inc. (NYSE:OXM), around 1.09% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to OXM.
Since Oxford Industries, Inc. (NYSE:OXM) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few money managers who were dropping their entire stakes heading into Q4. Interestingly, Lee Ainslie's Maverick Capital sold off the largest investment of the "upper crust" of funds tracked by Insider Monkey, valued at an estimated $12.4 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also cut its stock, about $0.8 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Oxford Industries, Inc. (NYSE:OXM). We will take a look at Bloom Energy Corporation (NYSE:BE), Cara Therapeutics Inc (NASDAQ:CARA), Simulations Plus, Inc. (NASDAQ:SLP), and Intellia Therapeutics, Inc. (NASDAQ:NTLA). All of these stocks' market caps resemble OXM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BE,10,44648,-3 CARA,10,84410,-7 SLP,10,35925,-2 NTLA,10,24877,-3 Average,10,47465,-3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $28 million in OXM's case. Bloom Energy Corporation (NYSE:BE) is the most popular stock in this table. On the other hand Bloom Energy Corporation (NYSE:BE) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Oxford Industries, Inc. (NYSE:OXM) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on OXM, though not to the same extent, as the stock returned 22.2% in Q2 and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.