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Were Hedge Funds Right About Dumping Oscar Health, Inc. (OSCR)?

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·6 min read
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  • OSCR
  • ^GSPC

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 June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Oscar Health, Inc. (NYSE:OSCR).

Oscar Health, Inc. (NYSE:OSCR) was in 16 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 26. OSCR investors should pay attention to a decrease in support from the world's most elite money managers of late. There were 26 hedge funds in our database with OSCR positions at the end of the first quarter. Our calculations also showed that OSCR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To the average investor there are several indicators shareholders have at their disposal to analyze their stock investments. Some of the most under-the-radar indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outpace the S&P 500 by a solid margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.


Philippe Laffont of Coatue Management

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Do Hedge Funds Think OSCR Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards OSCR over the last 24 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is OSCR A Good Stock To Buy?
Is OSCR A Good Stock To Buy?

Among these funds, Thrive Capital held the most valuable stake in Oscar Health, Inc. (NYSE:OSCR), which was worth $706.5 million at the end of the second quarter. On the second spot was Coatue Management which amassed $135.7 million worth of shares. Tiger Global Management LLC, XN Exponent Advisors, and Luminus 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 Thrive Capital allocated the biggest weight to Oscar Health, Inc. (NYSE:OSCR), around 46.43% of its 13F portfolio. General Equity Partners is also relatively very bullish on the stock, designating 4.84 percent of its 13F equity portfolio to OSCR.

Seeing as Oscar Health, Inc. (NYSE:OSCR) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of fund managers that decided to sell off their full holdings by the end of the second quarter. It's worth mentioning that Brad Gerstner's Altimeter Capital Management sold off the biggest investment of all the hedgies tracked by Insider Monkey, worth an estimated $12.1 million in stock. Eric Bannasch's fund, Cadian Capital, also dumped its stock, about $6.7 million worth. These transactions are important to note, as total hedge fund interest was cut by 10 funds by the end of the second quarter.

Let's go over hedge fund activity in other stocks similar to Oscar Health, Inc. (NYSE:OSCR). We will take a look at BRF SA (NYSE:BRFS), Grupo Simec S.A.B. de C.V. (NYSE:SIM), Navistar International Corp (NYSE:NAV), UniFirst Corp (NYSE:UNF), B2Gold Corp (NYSE:BTG), World Wrestling Entertainment, Inc. (NYSE:WWE), and Cabot Microelectronics Corporation (NASDAQ:CCMP). All of these stocks' market caps match OSCR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRFS,6,4320,-2 SIM,1,7147,0 NAV,22,1369292,1 UNF,14,53504,-3 BTG,15,251317,-3 WWE,33,256915,8 CCMP,22,216493,3 Average,16.1,308427,0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $308 million. That figure was $1051 million in OSCR's case. World Wrestling Entertainment, Inc. (NYSE:WWE) is the most popular stock in this table. On the other hand Grupo Simec S.A.B. de C.V. (NYSE:SIM) is the least popular one with only 1 bullish hedge fund positions. Oscar Health, Inc. (NYSE:OSCR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OSCR is 36.9. 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 29.6% in 2021 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately OSCR wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); OSCR investors were disappointed as the stock returned -20.9% since the end of June (through 11/5) 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.