Is Orion Engineered Carbons SA (NYSE:OEC) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Orion Engineered Carbons SA (NYSE:OEC) a buy, sell, or hold? Money managers are taking a pessimistic view. The number of bullish hedge fund bets dropped by 3 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 Ebix Inc (NASDAQ:EBIX), EnPro Industries, Inc. (NYSE:NPO), and Nuveen Premium Income Municipal Fund Inc (NYSE:NPI) to gather more data points.
If you’d ask most shareholders, hedge funds are viewed as underperforming, old financial vehicles of years past. While there are over 8000 funds with their doors open at present, Our experts look at the aristocrats of this group, about 700 funds. These investment experts oversee most of the hedge fund industry’s total asset base, and by following their unrivaled equity investments, Insider Monkey has unsheathed many investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
With all of this in mind, let’s go over the new action surrounding Orion Engineered Carbons SA (NYSE:OEC).
Hedge fund activity in Orion Engineered Carbons SA (NYSE:OEC)
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 14% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Don Morgan’s Brigade Capital has the biggest position in Orion Engineered Carbons SA (NYSE:OEC), worth close to $27.7 million, comprising 3.4% of its total 13F portfolio. The second largest stake is held by Lakewood Capital Management, managed by Anthony Bozza, which holds a $25.6 million position; 1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish consist of Marc Majzner’s Clearline Capital, Leon Cooperman’s Omega Advisors, and Ken Griffin’s Citadel Investment Group.
Because Orion Engineered Carbons SA (NYSE:OEC) has experienced a bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers who sold off their entire stakes last quarter. At the top of the heap, Michael Barnes and Arif Inayatullah’s Tricadia Capital Management sold off the biggest stake of all the hedgies watched by Insider Monkey, totaling an estimated $7.2 million in stock. Brian Taylor’s fund, Pine River Capital Management, also said goodbye to its stock, about $2 million worth of shares. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Orion Engineered Carbons SA (NYSE:OEC). These stocks are Ebix Inc (NASDAQ:EBIX), EnPro Industries, Inc. (NYSE:NPO), Nuveen Premium Income Municipal Fund Inc (NYSE:NPI), and Federal Signal Corporation (NYSE:FSS). This group of stocks’ market caps resembles Orion Engineered Carbons SA (NYSE:OEC)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EBIX | 12 | 69282 | -2 |
| NPO | 19 | 225981 | -2 |
| NPI | 4 | 2577 | 0 |
| FSS | 17 | 133639 | -2 |
As you can see, these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $124 million in Orion Engineered Carbons SA (NYSE:OEC)’s case. EnPro Industries, Inc. (NYSE:NPO) is the most popular stock in this table. On the other hand, Nuveen Premium Income Municipal Fund Inc (NYSE:NPI) is the least popular one with only 4 bullish hedge fund positions. Orion Engineered Carbons SA (NYSE:OEC) 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, EnPro Industries, Inc. (NYSE:NPO) might be a better candidate to consider a long position.