We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 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 OSI Systems, Inc. (NASDAQ:OSIS).
OSI Systems, Inc. (NASDAQ:OSIS) has experienced an increase in support from the world’s most elite money managers lately. OSIS was in 13 hedge funds’ portfolios at the end of the second quarter of 2019. There were 10 hedge funds in our database with OSIS positions at the end of the previous quarter. Our calculations also showed that OSIS isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are a multitude of formulas market participants employ to assess their stock investments. Some of the most under-the-radar formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outpace the S&P 500 by a significant margin (see the details here).
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 take a look at the latest hedge fund action surrounding OSI Systems, Inc. (NASDAQ:OSIS).
What have hedge funds been doing with OSI Systems, Inc. (NASDAQ:OSIS)?
At Q2’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the previous quarter. By comparison, 8 hedge funds held shares or bullish call options in OSIS a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Select Equity Group, managed by Robert Joseph Caruso, holds the biggest position in OSI Systems, Inc. (NASDAQ:OSIS). Select Equity Group has a $23.5 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by SG Capital Management, led by Ken Grossman and Glen Schneider, holding a $10.3 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Renaissance Technologies and Joel Greenblatt’s Gotham Asset Management.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Select Equity Group, managed by Robert Joseph Caruso, assembled the biggest position in OSI Systems, Inc. (NASDAQ:OSIS). Select Equity Group had $23.5 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $3.1 million investment in the stock during the quarter. The other funds with brand new OSIS positions are John Overdeck and David Siegel’s Two Sigma Advisors, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Benjamin A. Smith’s Laurion Capital Management.
Let’s also examine hedge fund activity in other stocks similar to OSI Systems, Inc. (NASDAQ:OSIS). These stocks are Akcea Therapeutics, Inc. (NASDAQ:AKCA), Stepan Company (NYSE:SCL), The Simply Good Foods Company (NASDAQ:SMPL), and Summit Materials Inc (NYSE:SUM). This group of stocks’ market values match OSIS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AKCA | 8 | 23583 | 1 |
| SCL | 11 | 55727 | -5 |
| SMPL | 23 | 243876 | 1 |
| SUM | 22 | 557034 | 0 |
| Average | 16 | 220055 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $220 million. That figure was $65 million in OSIS’s case. The Simply Good Foods Company (NASDAQ:SMPL) is the most popular stock in this table. On the other hand Akcea Therapeutics, Inc. (NASDAQ:AKCA) is the least popular one with only 8 bullish hedge fund positions. OSI Systems, Inc. (NASDAQ:OSIS) 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 OSIS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OSIS investors were disappointed as the stock returned -9.8% 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.
