Do Hedge Funds Love OSI Systems, Inc. (OSIS)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of OSI Systems, Inc. (NASDAQ:OSIS).

Is OSI Systems, Inc. (NASDAQ:OSIS) undervalued? The smart money was taking a bullish view. The number of long hedge fund positions moved up by 1 lately. OSI Systems, Inc. (NASDAQ:OSIS) was in 21 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 25. Our calculations also showed that OSIS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Rathjens of Arrowstreet Capital

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

At the end of the second quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OSIS over the last 24 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Cardinal Capital, managed by Amy Minella, holds the largest position in OSI Systems, Inc. (NASDAQ:OSIS). Cardinal Capital has a $27.9 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $14.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions contain  Renaissance Technologies, Mark Coe’s Intrinsic Edge Capital and Ken Grossman and Glen Schneider’s SG Capital Management. In terms of the portfolio weights assigned to each position SG Capital Management allocated the biggest weight to OSI Systems, Inc. (NASDAQ:OSIS), around 2.48% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.85 percent of its 13F equity portfolio to OSIS.

Now, some big names have been driving this bullishness. SG Capital Management, managed by Ken Grossman and Glen Schneider, initiated the most valuable position in OSI Systems, Inc. (NASDAQ:OSIS). SG Capital Management had $9 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.7 million position during the quarter. The only other fund with a brand new OSIS position is D. E. Shaw’s D E Shaw.

Let’s now review hedge fund activity in other stocks similar to OSI Systems, Inc. (NASDAQ:OSIS). These stocks are Delek Logistics Partners LP (NYSE:DKL), Alamo Group, Inc. (NYSE:ALG), Gol Linhas Aereas Inteligentes SA (NYSE:GOL), AssetMark Financial Holdings, Inc. (NYSE:AMK), Global Net Lease, Inc. (NYSE:GNL), PAR Technology Corporation (NYSE:PAR), and Eldorado Gold Corp (NYSE:EGO). This group of stocks’ market values are similar to OSIS’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $97 million in OSIS’s case. PAR Technology Corporation (NYSE:PAR) is the most popular stock in this table. On the other hand Delek Logistics Partners LP (NYSE:DKL) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks OSI Systems, Inc. (NASDAQ:OSIS) is more popular among hedge funds. Our overall hedge fund sentiment score for OSIS is 81.2. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately OSIS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OSIS were disappointed as the stock returned -6.5% since the end of the second quarter (through 10/22) 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 since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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