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In this article we will take a look at whether hedge funds think Ozon Holdings PLC (NASDAQ:OZON) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is OZON a good stock to buy? Money managers were cutting their exposure. The number of long hedge fund positions went down by 4 recently. Ozon Holdings PLC (NASDAQ:OZON) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 21. Our calculations also showed that OZON isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 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.
Chase Coleman of Tiger Global
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Do Hedge Funds Think OZON Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in OZON a year ago. So, let's see 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, Richard Driehaus's Driehaus Capital has the biggest position in Ozon Holdings PLC (NASDAQ:OZON), worth close to $50.5 million, accounting for 0.7% of its total 13F portfolio. On Driehaus Capital's heels is Tiger Global Management LLC, managed by Chase Coleman, which holds a $42.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish contain Shashin Shah's Think Investments, Israel Englander's Millennium Management and Matthew Hulsizer's PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Think Investments allocated the biggest weight to Ozon Holdings PLC (NASDAQ:OZON), around 2.86% of its 13F portfolio. Tenzing Global Investors is also relatively very bullish on the stock, setting aside 0.9 percent of its 13F equity portfolio to OZON.
Judging by the fact that Ozon Holdings PLC (NASDAQ:OZON) has experienced declining sentiment from the aggregate hedge fund industry, it's easy to see that there was a specific group of funds who sold off their entire stakes in the first quarter. It's worth mentioning that Eric Bannasch's Cadian Capital cut the largest stake of all the hedgies followed by Insider Monkey, worth about $41.4 million in stock. Guy Shahar's fund, DSAM Partners, also said goodbye to its stock, about $14.5 million worth. These moves are important to note, as total hedge fund interest was cut by 4 funds in the first quarter.
Let's go over hedge fund activity in other stocks similar to Ozon Holdings PLC (NASDAQ:OZON). These stocks are Steel Dynamics, Inc. (NASDAQ:STLD), Five Below Inc (NASDAQ:FIVE), Iron Mountain Incorporated (NYSE:IRM), Repligen Corporation (NASDAQ:RGEN), Trex Company, Inc. (NYSE:TREX), CBOE Global Markets Inc (NASDAQ:CBOE), and American Homes 4 Rent (NYSE:AMH). This group of stocks' market values are similar to OZON's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STLD,26,570961,-1 FIVE,43,1010018,1 IRM,16,56371,-2 RGEN,38,1039405,1 TREX,23,203682,-7 CBOE,33,767928,-5 AMH,27,677079,0 Average,29.4,617921,-1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.4 hedge funds with bullish positions and the average amount invested in these stocks was $618 million. That figure was $136 million in OZON's case. Five Below Inc (NASDAQ:FIVE) is the most popular stock in this table. On the other hand Iron Mountain Incorporated (NYSE:IRM) is the least popular one with only 16 bullish hedge fund positions. Ozon Holdings PLC (NASDAQ:OZON) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OZON is 27.1. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately OZON wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); OZON investors were disappointed as the stock returned -4.4% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.