Do Hedge Funds Love Oshkosh Corporation (OSK)?

The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Oshkosh Corporation (NYSE:OSK) and find out how it is affected by hedge funds’ moves.

Oshkosh Corporation (NYSE:OSK) shareholders have witnessed an increase in enthusiasm from smart money lately. 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 UIL Holdings Corporation (NYSE:UIL), CAE, Inc. (USA) (NYSE:CAE), and AU Optronics Corp. (ADR) (NYSE:AUO) to gather more data points.

If you’d ask most market participants, hedge funds are perceived as unimportant, old investment tools of the past. While there are more than an 8000 funds trading at present, We look at the elite of this club, about 700 funds. These hedge fund managers direct the lion’s share of the smart money’s total capital, and by monitoring their best equity investments, Insider Monkey has figured out a few investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, let’s review the recent action encompassing Oshkosh Corporation (NYSE:OSK).

What have hedge funds been doing with Oshkosh Corporation (NYSE:OSK)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Dmitry Balyasny’s Balyasny Asset Management has the most valuable position in Oshkosh Corporation (NYSE:OSK), worth close to $54.1 million, amounting to 0.4% of its total 13F portfolio. Coming in second is First Pacific Advisors LLC, led by Robert Rodriguez and Steven Romick, holding a $31.4 million position; 0.3% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism contain Clint Murray’s Lodge Hill Capital, Alexander Roepers’s Atlantic Investment Management and Matthew Lindenbaum’s Basswood Capital.

Now, some big names have jumped into Oshkosh Corporation (NYSE:OSK) headfirst. Atlantic Investment Management, managed by Alexander Roepers, established the most valuable position in Oshkosh Corporation (NYSE:OSK). Atlantic Investment Management had $12.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $7.7 million investment in the stock during the quarter. The other funds with brand new OSK positions are Alexander Mitchell’s Scopus Asset Management, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Oshkosh Corporation (NYSE:OSK). These stocks are UIL Holdings Corporation (NYSE:UIL), CAE, Inc. (USA) (NYSE:CAE), AU Optronics Corp. (ADR) (NYSE:AUO), and NorthStar Asset Management Group Inc (NYSE:NSAM). This group of stocks’ market caps match OSK’s market cap.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $445 million. That figure was $173 million in OSK’s case. NorthStar Asset Management Group Inc (NYSE:NSAM) is the most popular stock in this table. On the other hand CAE, Inc. (USA) (NYSE:CAE) is the least popular one with only 6 bullish hedge fund positions. Oshkosh Corporation (NYSE:OSK) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NSAM might be a better candidate to consider a long position.