We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like ONE Gas Inc (NYSE:OGS).
ONE Gas Inc (NYSE:OGS) investors should be aware of an increase in hedge fund sentiment lately. Our calculations also showed that OGS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a lot of formulas stock traders use to assess publicly traded companies. A pair of the most useful formulas are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the market by a very impressive margin (see the details here).
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the latest hedge fund action surrounding ONE Gas Inc (NYSE:OGS).
How have hedgies been trading ONE Gas Inc (NYSE:OGS)?
Heading into the fourth quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in OGS a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Winton Capital Management was the largest shareholder of ONE Gas Inc (NYSE:OGS), with a stake worth $28.6 million reported as of the end of September. Trailing Winton Capital Management was Millennium Management, which amassed a stake valued at $15.9 million. GLG Partners, AQR Capital Management, and Impax Asset Management 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 Shelter Harbor Advisors allocated the biggest weight to ONE Gas Inc (NYSE:OGS), around 1.46% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.34 percent of its 13F equity portfolio to OGS.
Consequently, some big names were leading the bulls’ herd. Shelter Harbor Advisors, managed by Peter J. Hark, established the biggest position in ONE Gas Inc (NYSE:OGS). Shelter Harbor Advisors had $2.9 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $1.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors and Hoon Kim’s Quantinno Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ONE Gas Inc (NYSE:OGS) but similarly valued. These stocks are Globus Medical Inc (NYSE:GMED), First Horizon National Corporation (NYSE:FHN), TFS Financial Corporation (NASDAQ:TFSL), and Texas Pacific Land Trust (NYSE:TPL). This group of stocks’ market caps are similar to OGS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GMED | 21 | 258701 | 2 |
| FHN | 31 | 192889 | 8 |
| TFSL | 8 | 157723 | 3 |
| TPL | 12 | 1254260 | -4 |
| Average | 18 | 465893 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $466 million. That figure was $96 million in OGS’s case. First Horizon National Corporation (NYSE:FHN) is the most popular stock in this table. On the other hand TFS Financial Corporation (NASDAQ:TFSL) is the least popular one with only 8 bullish hedge fund positions. ONE Gas Inc (NYSE:OGS) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately OGS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OGS investors were disappointed as the stock returned -7% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
