The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Overstock.com, Inc. (NASDAQ:OSTK) based on those filings.
Overstock.com, Inc. (NASDAQ:OSTK) investors should be aware of an increase in enthusiasm from smart money in recent months. Our calculations also showed that OSTK 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.
In the 21st century investor’s toolkit there are a multitude of tools market participants put to use to value their holdings. A pair of the best tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top investment managers can trounce the market by a significant margin (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the recent hedge fund action regarding Overstock.com, Inc. (NASDAQ:OSTK).
What does smart money think about Overstock.com, Inc. (NASDAQ:OSTK)?
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OSTK over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, GMT Capital held the most valuable stake in Overstock.com, Inc. (NASDAQ:OSTK), which was worth $5.7 million at the end of the third quarter. On the second spot was Contrarius Investment Management which amassed $5.3 million worth of shares. CSat Investment Advisory, Invenomic Capital Management, and Citadel Investment Group 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 Contrarius Investment Management allocated the biggest weight to Overstock.com, Inc. (NASDAQ:OSTK), around 0.68% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, setting aside 0.32 percent of its 13F equity portfolio to OSTK.
With a general bullishness amongst the heavyweights, key money managers have jumped into Overstock.com, Inc. (NASDAQ:OSTK) headfirst. GMT Capital, managed by Thomas E. Claugus, assembled the most valuable position in Overstock.com, Inc. (NASDAQ:OSTK). GMT Capital had $5.7 million invested in the company at the end of the quarter. Ali Motamed’s Invenomic Capital Management also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Overstock.com, Inc. (NASDAQ:OSTK) but similarly valued. We will take a look at CASI Pharmaceuticals Inc (NASDAQ:CASI), LF Capital Acquistion Corp. (NASDAQ:LFAC), National Bankshares Inc. (NASDAQ:NKSH), and Target Hospitality Corp. (NASDAQ:TH). This group of stocks’ market values resemble OSTK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CASI | 4 | 2517 | 1 |
| LFAC | 8 | 30428 | -1 |
| NKSH | 2 | 16023 | 0 |
| TH | 15 | 13371 | -4 |
| Average | 7.25 | 15585 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $12 million in OSTK’s case. Target Hospitality Corp. (NASDAQ:TH) is the most popular stock in this table. On the other hand National Bankshares Inc. (NASDAQ:NKSH) is the least popular one with only 2 bullish hedge fund positions. Overstock.com, Inc. (NASDAQ:OSTK) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on OSTK as the stock returned 379.8% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
