Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at ONEOK, Inc. (NYSE:OKE) from the perspective of those elite funds.
ONEOK, Inc. (NYSE:OKE) was in 20 hedge funds’ portfolios at the end of the third quarter of 2015. OKE has seen a decrease in enthusiasm from smart money recently. There were 22 hedge funds in our database with OKE holdings at the end of the previous quarter. At the end of this article we will also compare OKE to other stocks including W.R. Grace & Co. (NYSE:GRA), W.R. Berkley Corporation (NYSE:WRB), and The AES Corporation (NYSE:AES) to get a better sense of its popularity.
Follow Oneok Inc (Old Filings) (NYSE:OKE)
Follow Oneok Inc (Old Filings) (NYSE:OKE)
With all of this in mind, we’re going to take a peek at the recent action encompassing ONEOK, Inc. (NYSE:OKE).
What have hedge funds been doing with ONEOK, Inc. (NYSE:OKE)?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Soroban Capital Partners, managed by Eric W. Mandelblatt, holds the biggest position in ONEOK, Inc. (NYSE:OKE). Soroban Capital Partners has a $65.6 million position in the stock, comprising 0.5% of its 13F portfolio. Sitting at the No. 2 spot is Steve Cohen of Point72 Asset Management, with a $38 million position; 0.3% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish encompass Steve Cohen’s Point72 Asset Management, Jonathan Barrett and Paul Segal’s Luminus Management and Phill Gross and Robert Atchinson’s Adage Capital Management.
Seeing as ONEOK, Inc. (NYSE:OKE) has faced bearish sentiment from hedge fund managers, we can see that there was a specific group of hedgies who were dropping their entire stakes in the third quarter. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group said goodbye to the largest position of all the hedgies watched by Insider Monkey, valued at about $25.1 million in stock. George Soros’s fund, Soros Fund Management, also said goodbye to its stock, about $15 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ONEOK, Inc. (NYSE:OKE) but similarly valued. These stocks are W.R. Grace & Co. (NYSE:GRA), W.R. Berkley Corporation (NYSE:WRB), The AES Corporation (NYSE:AES), and Airgas, Inc. (NYSE:ARG). This group of stocks’ market caps match OKE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GRA | 47 | 2773512 | 2 |
| WRB | 22 | 1014441 | 2 |
| AES | 30 | 210764 | 5 |
| ARG | 30 | 606260 | 1 |
As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $1,151 million. That figure was $185 million in OKE’s case. W.R. Grace & Co. (NYSE:GRA) is the most popular stock in this table. On the other hand W.R. Berkley Corporation (NYSE:WRB) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks ONEOK, Inc. (NYSE:OKE) is even less popular than WRB. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
