Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Oaktree Capital Group LLC (NYSE:OAK) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. OAK was in 16 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with OAK holdings at the end of the previous quarter. At the end of this article we will also compare OAK to other stocks including NVR, Inc. (NYSE:NVR), Apartment Investment and Management Co. (NYSE:AIV), and American Campus Communities, Inc. (NYSE:ACC) to get a better sense of its popularity.
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What have hedge funds been doing with Oaktree Capital Group LLC (NYSE:OAK)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 7% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in OAK over the last 5 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Markel Gayner Asset Management, led by Tom Gayner, holds the biggest position in Oaktree Capital Group LLC (NYSE:OAK). Markel Gayner Asset Management has a $28.6 million position in the stock. The second most bullish fund manager is Hawkins Capital, led by Russell Hawkins, holding a $24.7 million position; the fund has 7.9% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions encompass Chuck Royce’s Royce & Associates, Murray Stahl’s Horizon Asset Management and Mark Travis’ Intrepid Capital Management. We should note that Intrepid Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, key money managers were leading the bulls’ herd. Israel Englander’s Millennium Management assembled the most valuable position in Oaktree Capital Group LLC (NYSE:OAK). Millennium Management had $2.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1.9 million investment in the stock during the quarter. The following funds were also among the new OAK investors: Dmitry Balyasny’s Balyasny Asset Management, Matthew Hulsizer’s PEAK6 Capital Management, and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Oaktree Capital Group LLC (NYSE:OAK) but similarly valued. We will take a look at NVR, Inc. (NYSE:NVR), Apartment Investment and Management Co. (NYSE:AIV), American Campus Communities, Inc. (NYSE:ACC), and NetApp Inc. (NASDAQ:NTAP). This group of stocks’ market caps resemble OAK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NVR | 22 | 590787 | -3 |
| AIV | 16 | 164712 | -4 |
| ACC | 17 | 140709 | 0 |
| NTAP | 28 | 387760 | 9 |
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $321 million. That figure was $131 million in OAK’s case. NetApp Inc. (NASDAQ:NTAP) is the most popular stock in this table. On the other hand Apartment Investment and Management Co. (NYSE:AIV) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Oaktree Capital Group LLC (NYSE:OAK) is even less popular than AIV. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
