Here is What Hedge Funds Think About Offerpad Solutions Inc. (OPAD)

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Offerpad Solutions Inc. (NYSE:OPAD).

Is Offerpad Solutions Inc. (NYSE:OPAD) a buy right now? Investors who are in the know were becoming hopeful. The number of long hedge fund bets increased by 22 lately. Offerpad Solutions Inc. (NYSE:OPAD) was in 22 hedge funds’ portfolios at the end of September. Our calculations also showed that OPAD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s view the new hedge fund action regarding Offerpad Solutions Inc. (NYSE:OPAD).

Christian Leone of Luxor Capital Group

Do Hedge Funds Think OPAD Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22 from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OPAD over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Luxor Capital Group, managed by Christian Leone, holds the largest position in Offerpad Solutions Inc. (NYSE:OPAD) . Luxor Capital Group has a $29.6 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Zimmer Partners, led by Stuart J. Zimmer, holding a $27.2 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain Peter S. Park’s Park West Asset Management, Andrew Weiss’s Weiss Asset Management and Joshua Nash’s Ulysses Management. In terms of the portfolio weights assigned to each position Indaba Capital Management allocated the biggest weight to Offerpad Solutions Inc. (NYSE:OPAD) , around 0.74% of its 13F portfolio. Ulysses Management is also relatively very bullish on the stock, designating 0.74 percent of its 13F equity portfolio to OPAD.

Consequently, key hedge funds have been driving this bullishness. Luxor Capital Group, managed by Christian Leone, assembled the most valuable position in Offerpad Solutions Inc. (NYSE:OPAD) . Luxor Capital Group had $29.6 million invested in the company at the end of the quarter. Stuart J. Zimmer’s Zimmer Partners also initiated a $27.2 million position during the quarter. The other funds with brand new OPAD positions are Peter S. Park’s Park West Asset Management, Andrew Weiss’s Weiss Asset Management, and Joshua Nash’s Ulysses Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Offerpad Solutions Inc. (NYSE:OPAD) but similarly valued. We will take a look at Canadian Solar Inc. (NASDAQ:CSIQ), Innospec Inc. (NASDAQ:IOSP), Century Communities, Inc (NYSE:CCS), Apollo Commercial Real Est. Finance Inc (NYSE:ARI), BrightSphere Investment Group Inc (NYSE:BSIG), Raven Industries, Inc. (NASDAQ:RAVN), and Grocery Outlet Holding Corp. (NASDAQ:GO). This group of stocks’ market caps are closest to OPAD’s market cap.

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As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $107 million in OPAD’s case. BrightSphere Investment Group Inc (NYSE:BSIG) is the most popular stock in this table. On the other hand Apollo Commercial Real Est. Finance Inc (NYSE:ARI) is the least popular one with only 7 bullish hedge fund positions. Offerpad Solutions Inc. (NYSE:OPAD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OPAD is 62.2. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately OPAD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OPAD were disappointed as the stock returned -26.6% since the end of September (through 12/31) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.