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Hedge funds don't get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don't realize is that 100% of the passive funds didn't see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 835 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Oxford Industries, Inc. (NYSE:OXM).
Is Oxford Industries, Inc. (NYSE:OXM) ready to rally soon? The smart money is in a pessimistic mood. The number of bullish hedge fund bets decreased by 3 recently. Our calculations also showed that OXM isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). OXM was in 12 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 15 hedge funds in our database with OXM positions at the end of the previous quarter.
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Lee Ainslie of Maverick Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. A former hedge fund manager is pitching the "next Amazon" in this video; again we are listening. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a look at the key hedge fund action encompassing Oxford Industries, Inc. (NYSE:OXM).
What have hedge funds been doing with Oxford Industries, Inc. (NYSE:OXM)?
At the end of the fourth quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OXM over the last 18 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Cardinal Capital held the most valuable stake in Oxford Industries, Inc. (NYSE:OXM), which was worth $47.8 million at the end of the third quarter. On the second spot was Maverick Capital which amassed $12.4 million worth of shares. Citadel Investment Group, AQR Capital Management, and Balyasny Asset Management 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 Cardinal Capital allocated the biggest weight to Oxford Industries, Inc. (NYSE:OXM), around 1.46% of its 13F portfolio. Maverick Capital is also relatively very bullish on the stock, earmarking 0.18 percent of its 13F equity portfolio to OXM.
Judging by the fact that Oxford Industries, Inc. (NYSE:OXM) has witnessed falling interest from hedge fund managers, we can see that there were a few hedgies that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Israel Englander's Millennium Management dumped the biggest investment of all the hedgies tracked by Insider Monkey, worth an estimated $5.1 million in stock. Donald Sussman's fund, Paloma Partners, also sold off its stock, about $0.9 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks similar to Oxford Industries, Inc. (NYSE:OXM). We will take a look at US Ecology Inc. (NASDAQ:ECOL), Independence Realty Trust Inc (NYSE:IRT), Centennial Resource Development, Inc. (NASDAQ:CDEV), and Enterprise Financial Services Corp (NASDAQ:EFSC). This group of stocks' market valuations resemble OXM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ECOL,14,38460,6 IRT,7,98479,-5 CDEV,29,188314,1 EFSC,14,58786,1 Average,16,96010,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $72 million in OXM's case. Centennial Resource Development, Inc. (NASDAQ:CDEV) is the most popular stock in this table. On the other hand Independence Realty Trust Inc (NYSE:IRT) is the least popular one with only 7 bullish hedge fund positions. Oxford Industries, Inc. (NYSE:OXM) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately OXM wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); OXM investors were disappointed as the stock returned -44.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.