Insider Monkey has processed numerous 13F filings of hedge funds and successful investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Office Depot Inc (NASDAQ:ODP) based on that data.
Office Depot Inc (NASDAQ:ODP) was in 22 hedge funds’ portfolios at the end of March. ODP investors should be aware of a decrease in support from the world’s most elite money managers recently. There were 24 hedge funds in our database with ODP holdings at the end of the previous quarter. Our calculations also showed that ODP isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a glance at the new hedge fund action regarding Office Depot Inc (NASDAQ:ODP).
How are hedge funds trading Office Depot Inc (NASDAQ:ODP)?
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards ODP over the last 15 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Office Depot Inc (NASDAQ:ODP) was held by Renaissance Technologies, which reported holding $21.7 million worth of stock at the end of March. It was followed by Arrowstreet Capital with a $17.1 million position. Other investors bullish on the company included Gotham Asset Management, Two Sigma Advisors, and Point72 Asset Management.
Judging by the fact that Office Depot Inc (NASDAQ:ODP) has witnessed a decline in interest from hedge fund managers, logic holds that there lies a certain “tier” of fund managers that elected to cut their full holdings in the third quarter. At the top of the heap, John Paulson’s Paulson & Co said goodbye to the largest investment of all the hedgies monitored by Insider Monkey, valued at about $12.9 million in stock. David Harding’s fund, Winton Capital Management, also sold off its stock, about $9.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Office Depot Inc (NASDAQ:ODP) but similarly valued. We will take a look at Stepan Company (NYSE:SCL), AnaptysBio, Inc. (NASDAQ:ANAB), Tanger Factory Outlet Centers Inc. (NYSE:SKT), and SM Energy Company (NYSE:SM). This group of stocks’ market values are similar to ODP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCL | 16 | 50725 | 4 |
| ANAB | 20 | 708803 | 0 |
| SKT | 15 | 92722 | 1 |
| SM | 21 | 304913 | 1 |
| Average | 18 | 289291 | 1.5 |
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 $289 million. That figure was $79 million in ODP’s case. SM Energy Company (NYSE:SM) is the most popular stock in this table. On the other hand Tanger Factory Outlet Centers Inc. (NYSE:SKT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Office Depot Inc (NASDAQ:ODP) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately ODP wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ODP were disappointed as the stock returned -45% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
