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. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Owens Corning (NYSE:OC)?
Owens Corning (NYSE:OC) has seen a decrease in support from the world’s most elite money managers recently. Owens Corning (NYSE:OC) was in 30 hedge funds’ portfolios at the end of March. The all time high for this statistic is 47. Our calculations also showed that OC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Louis Bacon Moore of Moore Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a look at the new hedge fund action regarding Owens Corning (NYSE:OC).
Do Hedge Funds Think OC Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the previous quarter. On the other hand, there were a total of 30 hedge funds with a bullish position in OC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GLG Partners held the most valuable stake in Owens Corning (NYSE:OC), which was worth $52.3 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $50.1 million worth of shares. Levin Easterly Partners, Arrowstreet Capital, and Greenhaven Associates 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 Levin Easterly Partners allocated the biggest weight to Owens Corning (NYSE:OC), around 2.9% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, earmarking 2.17 percent of its 13F equity portfolio to OC.
Because Owens Corning (NYSE:OC) has faced declining sentiment from hedge fund managers, it’s safe to say that there exists a select few fund managers who sold off their positions entirely last quarter. Intriguingly, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital dropped the largest investment of all the hedgies followed by Insider Monkey, totaling close to $24.7 million in stock. Rob Citrone’s fund, Discovery Capital Management, also sold off its stock, about $21.4 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 8 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Owens Corning (NYSE:OC) but similarly valued. These stocks are Athene Holding Ltd. (NYSE:ATH), Morningstar, Inc. (NASDAQ:MORN), Regency Centers Corp (NYSE:REG), Aramark (NYSE:ARMK), Inphi Corporation (NYSE:IPHI), Builders FirstSource, Inc. (NASDAQ:BLDR), and Centrais Eletricas Brasileiras SA (NYSE:EBR). All of these stocks’ market caps resemble OC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATH | 44 | 1349076 | 8 |
| MORN | 25 | 1044340 | 6 |
| REG | 17 | 132833 | -7 |
| ARMK | 39 | 1062881 | 6 |
| IPHI | 34 | 1991339 | 0 |
| BLDR | 48 | 1694149 | 11 |
| EBR | 5 | 1208 | -1 |
| Average | 30.3 | 1039404 | 3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $1039 million. That figure was $285 million in OC’s case. Builders FirstSource, Inc. (NASDAQ:BLDR) is the most popular stock in this table. On the other hand Centrais Eletricas Brasileiras SA (NYSE:EBR) is the least popular one with only 5 bullish hedge fund positions. Owens Corning (NYSE:OC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OC is 45.2. 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. 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately OC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); OC investors were disappointed as the stock returned 6.8% since the end of March (through 7/2) 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.
Follow Owens Corning (NYSE:OC)
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Disclosure: None. This article was originally published at Insider Monkey.
