Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about ONEOK, Inc. (NYSE:OKE).
Is ONEOK, Inc. (NYSE:OKE) an excellent investment right now? The best stock pickers are taking a bullish view. The number of bullish hedge fund positions improved by 7 in recent months. Our calculations also showed that OKE isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are viewed as unimportant, old investment tools of the past. While there are more than 8000 funds trading at present, Our experts choose to focus on the elite of this group, approximately 750 funds. It is estimated that this group of investors shepherd the majority of all hedge funds’ total capital, and by observing their top picks, Insider Monkey has formulated several investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the new hedge fund action regarding ONEOK, Inc. (NYSE:OKE).
How are hedge funds trading ONEOK, Inc. (NYSE:OKE)?
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 50% from the first quarter of 2019. By comparison, 25 hedge funds held shares or bullish call options in OKE a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ONEOK, Inc. (NYSE:OKE) was held by Zimmer Partners, which reported holding $174.6 million worth of stock at the end of March. It was followed by Point72 Asset Management with a $51 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and AQR Capital Management.
Consequently, key money managers were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in ONEOK, Inc. (NYSE:OKE). Point72 Asset Management had $51 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $24.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Perella Weinberg Partners, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Renaissance Technologies.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ONEOK, Inc. (NYSE:OKE) but similarly valued. We will take a look at The Hershey Company (NYSE:HSY), Nokia Corporation (NYSE:NOK), Sprint Corporation (NYSE:S), and Lam Research Corporation (NASDAQ:LRCX). All of these stocks’ market caps are similar to OKE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HSY | 27 | 830810 | 5 |
| NOK | 24 | 315734 | -2 |
| S | 25 | 956725 | 1 |
| LRCX | 35 | 1298891 | 3 |
| Average | 27.75 | 850540 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $851 million. That figure was $381 million in OKE’s case. Lam Research Corporation (NASDAQ:LRCX) is the most popular stock in this table. On the other hand Nokia Corporation (NYSE:NOK) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks ONEOK, Inc. (NYSE:OKE) is even less popular than NOK. Hedge funds clearly dropped the ball on OKE as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on OKE as the stock returned 8.5% during the third quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
