As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the second quarter. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Opko Health Inc. (NASDAQ:OPK).
Opko Health Inc. (NASDAQ:OPK) has seen an increase in hedge fund interest recently. Our calculations also showed that OPK isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the recent hedge fund action surrounding Opko Health Inc. (NASDAQ:OPK).
What have hedge funds been doing with Opko Health Inc. (NASDAQ:OPK)?
At the end of the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OPK over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Opko Health Inc. (NASDAQ:OPK) was held by Millennium Management, which reported holding $5.3 million worth of stock at the end of March. It was followed by D E Shaw with a $3.7 million position. Other investors bullish on the company included Highbridge Capital Management, Balyasny Asset Management, and Citadel Investment Group.
Consequently, some big names were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in Opko Health Inc. (NASDAQ:OPK). Balyasny Asset Management had $0.6 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.4 million position during the quarter. The following funds were also among the new OPK investors: Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, John A. Levin’s Levin Capital Strategies, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s check out hedge fund activity in other stocks similar to Opko Health Inc. (NASDAQ:OPK). We will take a look at Safety Insurance Group, Inc. (NASDAQ:SAFT), Inspire Medical Systems, Inc. (NYSE:INSP), RPC, Inc. (NYSE:RES), and First Busey Corporation (NASDAQ:BUSE). All of these stocks’ market caps match OPK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAFT | 10 | 47551 | -1 |
| INSP | 19 | 287939 | 1 |
| RES | 16 | 83837 | -4 |
| BUSE | 11 | 42651 | -2 |
| Average | 14 | 115495 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $13 million in OPK’s case. Inspire Medical Systems, Inc. (NYSE:INSP) is the most popular stock in this table. On the other hand Safety Insurance Group, Inc. (NASDAQ:SAFT) is the least popular one with only 10 bullish hedge fund positions. Opko Health Inc. (NASDAQ:OPK) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately OPK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OPK investors were disappointed as the stock returned -14.3% during the third 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
